Krakatau case must not affect privatization plans<\/p>\n
JAKARTA (JP): Indonesia must continue with its program to
\nprivatize state enterprises and secure badly needed foreign
\nexchange, despite worries over the lack of transparency in the
\nsale of steel maker PT Krakatau Steel.<\/p>\n
Former finance minister Mar'ie Muhammad said the Krakatau case
\nshould not affect the privatization program.<\/p>\n
Proceeds from the privatization program would help to finance
\nthe 1998\/1999 state budget, which has been badly affected by the
\nplunge in the value of the rupiah against the U.S. dollar, he
\nsaid.<\/p>\n
\"If we can secure US$2 billion from the privatization program
\nthen that would be a very meaningful contribution to the budget,\"
\nhe told journalists on Friday.<\/p>\n
The government plans to sell 12 state-owned companies in the
\ncurrent fiscal year and hopes to raise Rp 15 trillion ($1.2
\nbillion) by doing so.<\/p>\n
Mar'ie explained that the sharp depreciation in the rupiah had
\nconsiderably inflated planned expenditure. The budget has
\nallocated trillions of rupiah to subsidize the import of
\nessential food items.<\/p>\n
\"Proceeds from privatizations can be used to cover some of the
\nbudget deficit,\" he said, adding that the deficit would be
\nfurther worsened by last week's plunge in the rupiah, which
\nsurpassed Rp 15,000 to the dollar last week.<\/p>\n
He stressed that the privatization process must be transparent
\nand arranged in a way that ensured no company could \"steal a
\nmarch\" in the competition to acquire state assets.<\/p>\n
State Minister for the Empowerment of State Enterprises Tanri
\nAbeng was recently accused of quietly trying to sell PT Krakatau
\nSteel to Netherlands-based Ispat International.<\/p>\n
Infuriated<\/p>\n
The House of Representatives was infuriated by press reports
\nof the accusations which quoted Krakatau's management.<\/p>\n
Although Tanri later explained that it was not a final deal
\nbut part of the early stages of a 12 steps process which includes
\ncompetitive bidding, some observers suspect that Ispat was trying
\nto steal an early start in the competition.<\/p>\n
Ispat's local partner is a company related to the former first
\nfamily.<\/p>\n
Despite Tanri's explanation, some House members urged the
\ngovernment to cancel the privatization program.<\/p>\n
Tanri said the government would not cancel the memorandum of
\nunderstanding signed with Ispat chairman Lakshmi N. Mittal on May
\n7, unless Ispat, which is listed as a bluechip company on the New
\nYork Stock Exchange, failed to undertake a due diligence process
\nwithin 60 days of signing the memorandum.<\/p>\n
He also said that investment bank Salomon Smith Barney, which
\nhad been appointed to advise the government over the sale, would
\nsoon invite 12 foreign steel companies to submit competitive bids
\nfor PT Krakatau.<\/p>\n
The government has appointed nine overseas investment banks
\nincluding Salomon to assist in the privatization process.<\/p>\n
Tanri indicated that strategic foreign investors would be
\ngiven a say in the management of the state-owned companies.<\/p>\n
This may explain why some bureaucrats have been trying hard to
\nthwart the privatization program, because for a long time they
\nhave used the state companies as personal cash cows, one analyst
\nsaid. (rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/krakatau-case-must-not-affect-privatization-plans-1447893297",
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"sponsor": "Okusi Associates",
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