Law on privatization urgently needed, say legislators<\/p>\n
Dadan Wijaksana
\nThe Jakarta Post
\nJakarta<\/p>\n
Government plans to sell five state-owned companies in the
\nfirst half of the year may yet again face other obstacles, as
\nlegislators insist the government should first give the proposal
\na solid legal basis.<\/p>\n
The establishment of a strong legal foundation -- in the form
\nof a law -- is inevitable to avoid further negative responses
\nfrom the public, the lawmakers argued.<\/p>\n
Head of House Commission V on trade and industry Suryadharma
\nAli stressed the need for the establishment of such a regulation,
\nso as to guarantee a smooth passage for the crucial program.<\/p>\n
\"We would prefer the (privatization) program to be carried out
\nafter the establishment of the new law on privatization, not
\nbefore it,\" Suryadharma told The Jakarta Post on Tuesday.<\/p>\n
As it would stipulate a clear classification and mechanism as
\nto which and how state-owned firms are to be sold, the law would
\npreclude delaying tactics being used whenever a company were up
\nfor sale, he added.<\/p>\n
He said that the law in question was still being thoroughly
\nexamined by the state secretary.<\/p>\n
This should serve as another blow to the government, as the
\nstatement came at a time State Minister of State Enterprises
\nLaksamana Sukardi was unveiling plans to sell five companies this
\nsemester.<\/p>\n
The five are international call operator PT Indosat,
\npharmaceutical companies PT Indo Farma and PT Kimia Farma,
\nproperty company PT Wisma Nusantara International and airport
\noperator PT Angkasa Pura II.<\/p>\n
Laksamana said the move was necessary to meet the
\nprivatization target of Rp 3.5 trillion (around US$ 350 million).<\/p>\n
Another lawmaker Azwir Dainy Tara, also a member of House
\nCommission V, stressed the importance of such a law before the
\ngovernment went ahead with its sale plans.<\/p>\n
\"I do not understand why the government is rushing to sell
\nthose companies without waiting for the establishment of the
\nprivatization law first,\" Azwir complained.<\/p>\n
\"The law would be crucial in determining what firms could or
\ncould not be sold, the system, the pricing and so on. The
\ngovernment should have waited for this.\"<\/p>\n
The privatization program was required by the International
\nMonetary Fund (IMF) as a condition for the government to accept
\nbailouts from the agency to help the country recover from the
\neconomic crisis. It is also supported by many in the country as a
\nway of ending chronic inefficiencies in state enterprises.<\/p>\n
However, last year, the government's privatization program hit
\na snag due to, among other things, a lack of support from
\npoliticians.<\/p>\n
Growing nationalism among many members of the public, who are
\nconcerned at the growing domination of foreigners in the national
\neconomy, is also considered a factor behind the failure of the
\nprogram.<\/p>\n
A major example of the failure has been the government's
\ninability to sell its 51 percent stake in cement maker PT Semen
\nGresik due to strong opposition from politicians, locals and
\nworkers, who voiced nationalist slogans in their opposition to
\nthe sale.<\/p>\n
Laying less stress on nationalist sentiments, both lawmakers
\nsaid that in principle they supported the privatization program,
\nbut it had to be selective.<\/p>\n
\"Privatization is essential, we need the proceeds to cover our
\nbudget deficit; however, a selective approach must be applied
\nhere. Not all state-owned companies can be sold,\" Surya added.<\/p>\n
The proceeds target from privatization this year stands at Rp
\n6.5 trillion, to be used mainly to help reduce the state budget
\ndeficit.<\/p>\n
Due to the huge sum of money the state budget has to allocate
\neach year for debt repayment, the country has been relying on
\nincome from privatization and the sale of assets controlled by
\nthe Indonesian Bank Restructuring Agency (IBRA).<\/p>",
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