Board of Commissioners

 

From left to right : Tjahyadi Lukiman, Linda Lius, Kumhal Djamil, Muliany Anwar, Hardi Sasmita, Tan Huiliang.

 

Dear Respected Shareholders and Stakeholders,

Praise be to the God Almighty for all His blessings, I, on behalf of Board of Commissioners of PT Voksel Electric Tbk., would like to present the Company’s Annual Report for the fiscal year ended on December 31, 2018. This Annual Report is a form of the Company’s responsibility towards Shareholders and the Public.

General View of Macroeconomics

The Company passes 2018 with variety challenges in term of macro economy, in global as well as domestic area.

The global situation was quite challenging for many companies to survive. The trade war between the US and China effect significant fluctuations in the overall business impact. In addition, the interest rate normalization policy from the US Fed Funds Rate triggered a weakening of the Rupiah and the exchange rate volatility also quite significant.

The current state of the nation also affects the overall economic situation. The business climate is still showing good progress even when the political situation is heating up due to upcoming elections in 2019. In the last quarter of 2018, Indonesia’s economy documented a growth of 5.17%, a promising figure for the Company’s business growth. Another challenge faced by the Company is related to fluctuations in raw material prices, due to the weakening exchange rate of the Rupiah against the US Dollar that affects the Company’s operational activities, perticularly due to the high demand of imported raw materials.

However, opportunities arised from the commitment of the Indonesian Government in supporting local infrastructure projects in 2018, especially in the fields of electricity and telecommunications. Therefore, this opportunity will contribute directly to the growth of other economic sectors, including the cable industry. So, despite the volatility of metal prices, the Board of Directors sees that the cable industry’s performance has remained positive.

Strategy Implementation Assessment in 2018

The Board of Commissioners considers that the Board of Directors has worked optimally to make the most of opportunities available and tackle challenges throughout 2018. Implementation of strategies and budgets has been executed, in line with the approved strategies. The Board of Commissioners considers the effort to achieve the targets made by management is in accordance with the Strategic Planning & Budgeting.

The Board of Commissioners sees many strategic initiatives carried out by the Board of Directors in facing challenges are efficient in all operational fields including improving quality, both for goods and services, expanding production capacity on products with margin, measurable currency and metal hedging, as well as suppressing inventory, production costs and HR turnover.

Assessment on Board of Directors Performance in 2018

Broadly speaking, the Board of Commissioners considers Board of Directors carried out its commendable operational duties and responsibilities in 2018. The functional activities achieved by the Company include accolades, human resources, technology, production, marketing, finance, environment and CSR activities.

According to the Board of Commissioners, achievement in profit, work plan and budget of the Company are quite ideal in 2018, reflected in the level of achievement of the Company compared to the targets, as stated in the KPI as the main system.

Business growth was in line with the growth of goods and services. Judging from this matter, the Board of Commissioners considers the Board of Directors has taken the right step in investing in various fields in 2018, including the development of infrastructure, organizational structures, work facilities in the form of a new building and quality development laboratory, training to improve the quality of human resources, development of system policies and procedures, as well as product development in the form of product and technology diversification to increase the production capacity and quality of medium voltage cables, as well as investment in technology to expand the production of high voltage cables. Everything will lead to investment in the HR and production equipment as a way to to keep up with sustainable business development and fulfill the Company’s vision and mission.

Evaluation on 2019 Business Prospect The global and domestic economic uncertainties will still occur in 2019. On average, global and domestic ranking institutions agree to predict that Indonesia’s 5.3% economic target will be difficult to achieve.

This year the Directors’ efforts to complete the expansion of a high-voltage cable factory construction are highly appreciated by the Board of Commissioners to improve the Company’s performance.

In the global market, trade wars that have caused uncertainties for investment activities are still continuing even though the Fed’s monetary policy through normalization steps will still be carried out albeit not being as strict as in 2018. In some regions of the country, geopolitical tension will increase, certainly giving a negative reaction to the global economy.

Facing the global situation, which is predicted to remain in uncertainties, Indonesia will still face the current account deficit and will affect the exchange rate, inflation and investment, as well as economic growth. Various steps have been taken by the government to overcome global uncertainties. However, this step has yet to fully yield short-term results. Moreover, short-term policies such as B20, tightening of import tariffs on consumer goods and others have not helped much. Increasing exports is the best solution to overcome these problems.

Despite the fact that there will be many obstacles, the Board of Commissioners is optimistic that the Company’s business prospects in 2019 will remain bright. The Board of Commissioners views that in spite of the slowdown in the global growth, uncertainties in the global market will decrease. Positive business prospects are also supported by the ongoing opportunities for electricity and telecommunications programs, increasing demand for high voltage cables.

Good Corporate Governance Assessment in 2018

The working relationship between the Board of Commissioners and Directors runs harmoniously. The Board of Commissioners executes the micro function as the supervisor of operational policies, while the Board of Directors oversees the micro function as the executor of duties and strategic policy makers in the context of carrying out the Company’s vision and mission.

The relationship between the Board of Commissioners and the Board of Directors is always based on the principles of openness, equality, and mutual respect through a transparent process in determining the goals and objectives of the Company, as well as the achievement and performance evaluation carried out by the Board of Directors. The implementation of harmonious relations is demonstrated by conducting monthly performance evaluation meetings to evaluate the monthly, semester and annual performances as well as monitoring the steps taken by the Board of Directors.

The Board of Commissioners and the Board of Directors also hold special meetings to discuss specific issues faced by the Company. In making decisions, the Board of Commissioners and the Board of Directors always implement the consensus system. Good interactions have been established as well as strong and good relations that will ultimately create a harmonious relationship.

The Company is v ery committed to implementing ethics and compliance. This is actualized thr ough business practices and guideline called the ‘Business Conduct Manual’, for all emplo y ees. In 2018, the code of conduct was updated and serves as a guideline for all emplo y ees to execute business operations. The Company has an independent internal audit and a committee under the auspice of the Board of Commissioners. The Company also has operating policies, an SOP system and a reporting system; all of which ar e intended to support the GCG implementation.

The Boar d of Commissioners also commends the performance of the Boar d of Dir ectors in implementing CSR. The Boar d of Dir ectors, through its policies, striv es to cr eate a good and harmonious work en vir onment be tween employees. One of the ke ys to the success of the Boar d of Dir ectors in implementing CSR pr ograms is b y pr o viding opportunities for individuals fr om various educational institutions to gain knowledge thr ough a pr ogram organized b y the Company at the LPKS (Private Job Training Institution) of PT Voksel Electric Tbk. In this case, the Company cooperates with various parties such as the r egional go v ernment to conduct the training. It is hoped that thr ough this training pr ogram, emplo y ees will be r eady for work that can benefit the community as well as the Company.

The Company also organizes compe titions for emplo y ees in or der to foster deeper insights into the corporate cultur e and basic values .

Performance Assessment of Committees under Boar d of Commissioners

The implementation of the Boar d of Commissioners’ supervisory duties throughout 2018 was supported b y the A udit Committee and the Nomination and Remuneration Committee as committees under the Boar d of Commissioners.

The A udit Committee had monitor ed the follow- up of audit r esults both internally and externally in or der to assess the adequacy of internal contr ols, including the adequacy of the financial r eporting pr ocess.

The Nomination and Remuneration Committee had r e viewed and discussed the calculation of r emuneration and pr oposals r elated to the amount of remuneration for members of the Boar d of Commissioners and Boar d of Dir ectors to the Annual GMS. The r emuneration committee had r e viewed the discussion of r emuneration structur es and pr o vided suggestions to the Boar d of Commissioners, and had compiled compe tency criteria. On the other hand, the Company curr ently has no plans to de v elop a new committee because the risk management function under the contr ol of the A udit Committee is still consider ed sufficient.

Based on the r eports submitted b y the two committees, the Boar d of Commissioners considers the A udit Committee and Nomination and Remuneration Committee ha ving worked optimally in supporting the duties of the Boar d of Commissioners, particularly r elated to the implementation of financial and operational supervision activities and r emuneration policies thr oughout 2018.

Changes in Boar d of Commissioners Composition in 2018

In 2018, ther e was a change in the composition of the Boar d of Commissioners based on the Decision of the 2018 Annual General Mee ting of Shareholders (AGMS). The 2018 AGMS appr o v ed the r esignation of Mr. Hir o ya Iwasaki as the Company’s Dir ector and appointed Mr. Shoichi Yamada as Dir ector of the Company.

Appreciation

The Boar d of Commissioners giv es high appr eciation to the Boar d of Dir ectors and the Management, as well as all employ ees for the Company’s successful performance demonstrated thr oughout 2018. To shar eholders and all stakeholders, including r egulators, business partners and all customers, the Boar d of Commissioners expr esses deep appr eciation for the support giv en to the Company during 2018. The entire Boar d of Commissioners, the Boar d of Dir ectors and the Management of the Company ar e optimistic about the futur e. Le t’s bring toge ther all y our de termination and efforts towar ds be tter performance.

Jakarta, March 2019