Privatization needs public campaign, IMF says<\/p>\n
Berni K. Moestafa, The Jakarta Post, Jakarta<\/p>\n
The International Monetary Fund (IMF) said a public awareness
\ncampaign promoting the importance of selling state assets was
\ncrucial to speeding up Indonesia's privatization process amid
\nfrequent opposition from various groups.<\/p>\n
The IMF's senior representative for Jakarta, David C.L.
\nNellor, said on Tuesday that the government should communicate
\nwith the public about the long-term benefits of privatization.<\/p>\n
\"The government must seek public support by explaining the
\nbenefit beyond the process (of privatization),\" Nellor told a
\nmedia briefing.<\/p>\n
He acknowledged that privatization often becomes a sensitive
\nissue, touching on concerns over ownership, and creates
\nuncertainties for parties involved with the state firm.<\/p>\n
\"In any privatization, there are groups that tend to be harmed
\nby this event,\" he said, citing as an example that England had
\nfaced opposition from trade unions when that country began
\nprivatizing state firms.<\/p>\n
In Indonesia, opposition can range from trade unions, regional
\ngovernments, to legislators concerned with foreign control.<\/p>\n
The latest instance has been the planned divestment of cement
\nfirm PT Semen Gresik to the Mexican-based cement firm Cemex SA de
\nCV.<\/p>\n
Legislators argued the cement industry was too vital to be
\nunder foreign control.<\/p>\n
Similar concerns were also aired in the planned sale of PT
\nBank Central Asia (BCA) and last year's sale of large palm
\nplantation units to a Malaysian investor.<\/p>\n
Such developments have resulted in the failure of the
\ngovernment to secure a single sale during the past nine months.<\/p>\n
In the three months remaining until year's end, the government
\nmust rake in its entire 2001 revenue target of Rp 6.5 trillion
\n(about US$640 million).<\/p>\n
\"There is some light at the end of this difficult process,\"
\nNellor added.<\/p>\n
He said privatization promotes economic growth through the
\ninflow of investment. Proceeds from state asset sales could also
\nbe used to reduce the government's debt burden.<\/p>\n
He said countries like Argentina, Mexico and Egypt had
\nsuccessfully lowered their debt to gross domestic product (GDP)
\nratios with the help of privatization.<\/p>\n
That works in two ways, as privatization raises GDP, while its
\nproceeds lowers the debt burden, Nellor explained.<\/p>\n
He also said that privatized firms tend to become more
\nefficient so that, in the long-run, they would earn the
\ngovernment higher tax revenue.<\/p>\n
Separately, American business consultant James Castle
\nsuggested the government and legislators agree on a set of
\nguidelines for privatization. This, he said, should avoid the
\nproblems the government faces now.<\/p>\n
Economist Dradjad Wibowo has warned that legislators meddling
\nwith asset sales could become a new source of risk to foreign
\ninvestors.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/privatization-needs-public-campaign-imf-says-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}