Faltering privatization program 'affects banking'<\/p>\n
JAKARTA (JP): Government failure to raise the US$1 billion
\nprivatization proceeds targeted for the 1998\/1999 fiscal year
\nending in March, may create another obstacle for the bank
\nrestructuring program, according to economists.<\/p>\n
Research associate at the Management and Economic Research
\nCenter at the University of Indonesia Rasaka Mahi, said failure
\nto obtain the revenue may hamper the bank restructuring program
\nunless the government manages to accelerate the privatization
\nprogram in the next fiscal year.<\/p>\n
\"The government should either increase overseas loans or slow
\ndown the bank restructuring program to meet the privatization
\ntarget,\" he said.<\/p>\n
Earlier, a government source said funds generated from
\nprivatization programs -- primarily allocated to finance the bank
\nrestructuring program -- would total $380 million in the current
\nfiscal year, falling far short of the $1 billion target.<\/p>\n
The government has only managed to raise proceeds from the
\nsale of its stake in the publicly listed cement maker Semen
\nGresik and a unit of port operator PT Pelindo II. It also
\ndivested publicly listed instant noodle maker PT Indofood.<\/p>\n
State Minister of the Empowerment of State Enterprises Tanri
\nAbeng acknowledged on Thursday that proceeds from the
\nprivatization program were below target.<\/p>\n
The government is planning to recapitalize nine private banks
\nby providing up to 80 percent of funding requirements with 100
\npercent financing slated for state-owned banks and provincial
\ndevelopment banks.<\/p>\n
The government will finance the recapitalization program
\nthrough the issuance of bonds. Payment on the interest rates will
\nbe partly covered by the budget, amounting to Rp 17 trillion in
\nthe first year.<\/p>\n
The government announced recently that nine locally
\nincorporated private banks are qualified to join the massive
\nrestructuring program, but it has not revealed when the program
\nwill start.<\/p>\n
Rasaka said the government must ensure that proceeds already
\nraised not be used for other purposes if the recapitalization
\nprogram was not carried out this fiscal year.<\/p>\n
Separately, several legislators lambasted Tanri for lack of
\ntransparency in the privatization program, particularly for the
\nlatest privatization process of port operator PT Pelindo II and
\nPT Pelindo III.<\/p>\n
Paskah Suzetta and Uray Faisal Hamid, members of the House of
\nRepresentatives Commission VIII for the state budget and finance,
\nindicated at the weekend that the privatization process at
\nPelindo II and PT Pelindo III was not transparent.<\/p>\n
Uray insisted that each state company's sale should have been
\nfirst discussed with the House for approval.<\/p>\n
It is rumored the government sold Pelindo II's Jakarta
\nInternational Container Terminal to Grosbeak, a unit of Hong
\nKong's Hutchinson Whampoa, at a lower price and extended the
\nmanagement period than that proposed by the winning investor.<\/p>\n
Doubts about the tender process for the sale of Pelindo III
\nhave also been aired.<\/p>\n
To ensure transparent and fair practices in the privatization
\nprogram, House members should be involved in each individual
\nsale, Paskah said.<\/p>\n
\"We have to provide approval case by case. There has to be a
\nmechanism control,\" he said, adding that Tanri had failed to
\nhonor a promise that the House would be involved in individual
\nprivatization programs.<\/p>\n
He urged that until such a control was set up, the
\nprivatization program should temporarily cease.<\/p>\n
The two legislators said it was best if the privatization
\nprogram recommenced after the June general election. (rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/faltering-privatization-program-affects-banking-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}