Legislators oppose govt's plan on BCA divestment<\/p>\n
JAKARTA (JP): The government's plan to sell 51 percent of its
\nshares in the publicly listed Bank Central Asia (BCA) could hit a
\nsnag as legislators from some big parties have expressed strong
\nobjections to the move.<\/p>\n
Legislator Paskah Suzeta of the Golkar Party faction, the
\nsecond largest in the House of Representatives, and Faisal Baasir
\nof the United Development Party (PPP), the third biggest, told
\nThe Jakarta Post on Tuesday that their parties would oppose the
\nplanned divestment since no benefit accrued from it to the
\ncountry.<\/p>\n
"Our faction will reject the plan since the proceeds will not
\ncover the cost the government paid for the bank's
\nrecapitalization program," Paskah said.<\/p>\n
"Besides, from the investment point of view, there is no
\nurgency whatsoever in selling the government stake in BCA now,"
\nhe argued.<\/p>\n
Faisal Baasir concurred and said: "After being recapitalized,
\nBCA has developed into a healthy and profitable bank. Selling the
\nstake at its current price level would yield no profit for the
\ngovernment."<\/p>\n
Meanwhile, legislator Aberson Sihaholo of the Indonesian
\nDemocratic Party of Struggle (PDI Perjuangan), which is chaired
\nby President Megawati Soekarnoputri, refused to comment on his
\nparty's stance over the divestment plan, saying that this was a
\nmatter for party leaders.<\/p>\n
Lawmakers are paying special attention to the divestment of
\nthe government's stake in BCA partly because the government has
\nissued bonds worth trillions of rupiah to finance the bank's
\nrecapitalization.<\/p>\n
Last March, the government reached an agreement with the House
\nto sell 40 percent of its 60 percent stake in BCA through a
\nsecondary public offering and private placement.<\/p>\n
However, out of the blue the government, through the letter of
\nintent it signed on Monday, has promised to the International
\nMonetary Fund (IMF) that it will sell a 51 percent controlling
\nstake in BCA through a private placement. This commitment was
\ngiven without first consulting with lawmakers.<\/p>\n
State Minister for State Enterprises Laksamana Sukardi
\nexpressed optimism on Tuesday that the House would eventually
\napprove the divestment of 51 percent stake in BCA.<\/p>\n
"The situation now has changed," he said when asked if he was
\nworried the legislature might not give its approval for the
\ndivestment of a majority stake.<\/p>\n
He also said the government wanted to ensure that BCA would
\nremain healthy after being sold to a strategic investor.<\/p>\n
"In selling a bank, the price is not the only thing that is
\nimportant," said Laksamana, expressing fear that the government
\nwould be forced to bail out the bank again if the strategic
\npartner had little experience in bank management.<\/p>\n
"It's possible to sell the bank at a very high price, but what
\nif the buyer is a crook without clear credentials. We may have to
\nrecapitalize the bank again."<\/p>\n
"What we really need is a strategic partner who can maintain
\nthe bank in good shape over the long run," Laksamana said.<\/p>\n
Market analyst Lin Che Wei praised the planned sale of a
\ncontrolling stake in BCA as a "very good decision" from the
\nperspective of attracting serious bidders.<\/p>\n
With 51 percent of the bank up for grabs, possible strategic
\npartners were seriously considering buying BCA shares because
\nthey would have full control over BCA.<\/p>\n
"This is a good decision for the country's banking sector," he
\nsaid when asked to comment on the planned divestment.<\/p>\n
According to Lin Che Wei, Indonesia is facing a serious
\ndilemma.<\/p>\n
"On the one hand we don't want our banking assets to be
\ncontrolled by foreign investors, but on the other hand, if the
\nstakes are sold to local businessmen at heavily discounted
\nprices, the banks might end up back in the hands of the owners
\nwho proved themselves incapable of running them in the first
\nplace," he said.<\/p>\n
The IMF, Lin said, wanted healthy banks to be privatized
\nbecause "there are fears that if the banks are not privatized,
\nthe government will use them to bail out other banks which would
\nonly create a moral hazard for the other banks," he said.<\/p>\n
Lin, nevertheless, warned that the government must protect the
\ninterests of foreign investors in the country.<\/p>\n
"The government has to ensure that once foreign investors come
\nin, they won't be interfered with," he said. (03\/bkm)<\/p>",
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