Economists oppose privatization plan<\/p>\n
Dadan Wijaksana, The Jakarta Post, Jakarta<\/p>\n
In another campaign against the sale of state assets, a
\ncoalition of economists has urged a halt in government
\nprivatization and divestment programs, at least until the
\nformation of a new government resulting from the upcoming general
\nelections.<\/p>\n
The group, calling itself Indonesia Bangkit (Indonesia
\nAwakens) consists of around 35 prominent economists. It told the
\nmedia on Tuesday that such an approach was needed to preserve and
\nsafeguard state assets -- something that has yet to be achieved
\nby the current government.<\/p>\n
\"The public and legislators should plead for a temporary
\nmoratorium on asset sale programs to avoid further losses, both
\neconomical or non-economical,\" spokesman of the group Rizal Ramli
\nsaid.<\/p>\n
He pointed at the planned sale of a majority stake in state-
\nowned Bank Negara Indonesia (BNI) as an example of how the
\ngovernment was always in a rush to sell assets with the aim of
\nmeeting the needs of the state budget, without paying much
\nrespect to history.<\/p>\n
\"Especially if a majority stake in BNI is offered to
\nforeigners. This is just as bad as destroying the country's
\nprofound history in return for cheap money from foreigners,\" he
\nadded.<\/p>\n
The government is finalizing its preparations for selling off
\na 51 percent stake in BNI -- the country's second-largest lender
\n-- via a private placement mechanism, as part of this year's
\nprivatization program.<\/p>\n
The proceeds will be used to help plug the 2004 budget
\ndeficit, which has been earmarked at Rp 24.4 trillion, or 1.2
\npercent of gross domestic product (GDP).<\/p>\n
For this year the privatization program is targeted to rake in
\nRp 5 trillion (US$595 million) in proceeds.<\/p>\n
Apart from the proceeds, the government also expects other
\nbenefits arising from the privatization program, which is
\nallowing state-owned enterprises -- notorious for their culture
\nof corruption -- to perform at higher level of transparency,
\nefficiency and professionalism.<\/p>\n
Rizal, a former chief economics minister, disagreed, however,
\nwith that argument.<\/p>\n
Not that he was against sales of assets, Rizal added, but he
\npreferred only a minority rather than a majority stake to be
\nsold.<\/p>\n
\"The majority ownership of Indonesia's banking system by
\nforeigners will affect the monetary authority's ability to
\nformulate and execute monetary policy and credits,\" said Rizal
\nwithout elaborating.<\/p>\n
Equally important was the fact that the sale of BNI would be
\nmade when the bank's image has been severely damaged by the
\nrevelation of a Rp 1.7 trillion lending fraud, which would
\nprovide potential investors with a reason to offer a low bidding
\nprice.<\/p>\n
\"The government, rather than trying to improve BNI's
\nperformance under its supervision, is instead selling the bank as
\nquickly as possible,\" Rizal said, adding that under current
\ncircumstances, the bank was worth at most only 1.5 times its book
\nvalue, estimated at around Rp 5 trillion.<\/p>\n
Rizal also said that since BNI still held a large chunk of
\ngovernment bonds (injected into the bank to help improve its
\ncapital situation following the late 1990s financial crisis), the
\nbank would continue to receive Rp 3.5 trillion to Rp 4 trillion
\nper annum in interest rate payment from the government.<\/p>\n
\"If the (BNI) sale materializes, the (privatization) proceeds
\nwill be used up in two years simply by paying the interest on
\nrecap bonds,\" Rizal said.<\/p>\n
BNI holds around Rp 44 trillion-worth of recap bonds.<\/p>\n
The Indonesia Awakens forum groups together around 35 economic
\nexperts from various institutions. Included are Didik J.
\nRachbini, Hartoyo Wignyowiyoto, Revrisond Baswir, Sri Edi
\nSwasono, Aviliani and Dradjat Wibowo.<\/p>",
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"sponsor": "Okusi Associates",
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