...KPPU would not decide whether to accept or cancel it..."
Banten (ANTARA News) - Indonesian President Susilo Bambang Yudhoyono has called on businesses to also consider benefits for the country when making cooperation deals.

He said here on Thursday that the government fully supports domestic companies seeking cooperation for expansion.

"My advise to them is conduct negotiations for cooperation that would really benefit the country," he said after presiding over a coordination meeting on transportation and public works at the office of airport operator PT Angkasa Pura II.

Regarding recent reports on cooperation deal between Batavia Air and Air Asia President Yudhoyono said that so long as it does not run against the regulation it is alright as part of the two companies` strategy to expand their business.

"On reports about the acquisition of Batavia Air by Air Asia to my knowledge process has been carried out. Actually according to Law Number 1 of 2009, if I am not mistaken, in any cooperation the majority shareholder should remain in the hands of the domestic party. I have checked and it seemed their agreement documents have not reached the transportation minister. Certainly the minister would check it with the existing laws and consider the real benefit of the cooperation for our people," he said.

Earlier the country`s air transportation industry was surprised by news of Air Asia acquiring Batavia Air at a cost of US$80 million.

The acquisition is done by AirAsia through AirAsia Berhad (a Malaysian company) and PT Fersindo Nusaperkasa (the majority shareholder of PT Indonesia AirAsia).

"After months of negotiations we finally reached an agreement to build cooperation between AirAsia and Batavia Air," AirAsia Berhad CEO Tony Fernandez said at a press conference in Jakarta on July 26.

He said Batavia Air would be a perfect puzzle piece to fill in his company`s business plan as Batavia Air has strong domestic market.

With "the perfect marriage", he said, AirAsia is targeting securing a bigger market share in Indonesia which has a lot of tourism potentials.

He also said the cooperation was also expected to attract more tourists to come to Indonesia and make more people able to fly.

Tony Fernadez said right now AirAsia Indonesia controls around three percent of the domestic route and 41 percent international route passengers.

Fersindo`s president director Dharmadi meanwhile said AirAsia Berhad would hold 49 percent shares of Batavia Air while Fersindo holds the majority 51 percent.

Dharmadi who is also the president director of AirAsia Indonesia said the acquisition of 100 percent shares of Batavia Air would be done in two stages firstly through the acquisition of majority shares of 76.95 percent, followed by the acquisition of 23.05 percent later hopefully in the second quarter of 2013 based upon the approval of the Indonesian regulator.

After the acquisition AirAsia Indonesia would serve more than eight million passengers in 42 cities in Indonesia and 12 international destinations.

In addition to it the purchase of Batavia Air shares would also automatically increase the number of AirAsia Indonesia fleet.

Batavia Air president director Yudiawan Tansari said the acquisition agreement was made in view of tighter competition in the industry that has forced Batavia Air to conduct a corporate action and it was partnership with Air Asia.

"The growth of airline industry in Indonesia is fast making me believe Batavia Air needs a bigger scale to compete and grow," he said.

The AirAsia share price in Malaysia rose a day after the acquisition deal was announced by two cents to 3.75 ringgit.

The price of the company`s share moves from 3.75 to 3.71 ringgit per share with sales reaching 1.5 million shares.

In a statement quoted by Bernama. Hong Leong Invesment Bank Research (HLIB Research) says the acquisition would make AirAsia able to develop its fleet and network and secure a bigger market share.

"Batavia Air is the third biggest domestic airline in Indonesia with a market share of 14.2 percent boosting AirAsia`s international market share in Indonesia," he said.

However AirAsia`s move to secure Batavia Air could possibly be not as easy as Tony Fernandez has envisaged.

The transportation ministry has said that it has not received an official letter with regard to the acquisition.

In view of that the director general of air transportation, Herry Bhakti, said on July 27 there has not been any certainty if his office would give an approval to the agreement.

He said his office would see if the agreement was made in line with the existing law including on shareholding.

A problem might also come from the Business Competition Supervision Commission (KPPU) that has asked PT Indonesia AirAsia and PT Fersindo Nusa Perkasa to report their acquisition deal to PT Metro Batavia Group, the owner of Batavia Air.

"The company cannot say that notification is not needed because the accumulative turnover is still below Rp5 trillion or because the assets are worth no more than Rp2.5 trillion as it is the KPPU that will determine about it," KPPU chairman Tadjuddin Noer Said said here on July 30.

He said the acquisition deal must be reported based on anti-trust Law Number 5 of 1999 and Government Regulation Nubmer 57 of 2010 on merger and dissolution of companies.

AirAsia Indonesia as a company that would conduct the acquisition must inform about the plan within 30 days after the acquisition is effective.

He said KPPU would see if the deal would cause entry barrier for rivals, eradicate business efficiency, not really needed for avoiding bankruptcy and create unhealthy competition.

"So, KPPU would not decide whether to accept or cancel it only based upon dominance or monopoly market concentration that will be created after the merger but upon the four parameters," he said. (P008/YH)

Editor: Kunto Wibisono
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