23 foreign banks bid to back up privatization plan

23 foreign banks bid to back up privatization plan

JAKARTA (JP): State Minister for the Empowerment of State
Enterprises Tanri Abeng has said 23 foreign investment banks
would compete to become financial advisors and underwriters of
the country's privatization program.

He said the selection process, originally scheduled for the
middle of this month, would be held in Singapore from today until
Tuesday.

"I don't want to delay this selection process again," Tanri
told reporters yesterday following a meeting with Hubert Neiss,
the International Monetary Fund's Asia-Pacific director.

The selection of underwriters and financial advisers was
scheduled to start May 14, but was postponed due to political
unrest leading to the resignation of former president Soeharto.

The selection will take place in Singapore because some of the
bankers are reportedly still uncomfortable with the idea of
traveling to Jakarta.

Tanri said only 10 of the 23 foreign investment banks would be
chosen to advise or underwrite the privatization of the country's
12 state enterprises, expected to be completed in the current
fiscal year ending in March 1999.

The government plans to sell its stakes in seven unlisted
state-owned companies, and a further divestment in five listed
companies, including telecommunications companies PT Telkom and
PT Indosat, mining companies PT Tambang Timah and PT Aneka
Tambang and cement maker PT Semen Gresik.

The privatization is expected to raise Rp 15 trillion, of
which Rp 10 trillion would be used to support the 1998/1999 state
budget.

The budget has been strained to the limit due to the monetary
crisis which had plagued the country since July.

"Having the best investment banks is crucial," said Tanri, who
will make a presentation in Singapore about the government's
restructuring agenda for the country's 159 state-owned
enterprises.

He explained that Indonesia would select banks with the
expertise to restructure the state companies and with strong
networks able to bring in potential strategic partners.

Tanri said he was optimistic that investors were interested in
the country's privatization program, though he admitted that
political stability was an essential factor before investors
would enter the market.

Indonesia's political unrest has also caused a delay in the
schedule for potential foreign strategic partners to assess
state-owned companies.

Tanri, however, said eight potential partners, which had an
interest in Telkom, Indosat, Gresik and steelmaker PT Krakatau
Steel, had resumed the due diligence process following the
improved political situation in the country.

"The big game, however, will start when we have completed the
selection of the investment banks," he said, adding that 10 local
investment banks would also be involved in the privatization
process.

He said the U.S.-based consultancy Booz, Allen & Hamilton had
been chosen to help prepare a blue print for the restructuring of
the country's state-owned companies.

The firm is to work with several management institutes in the
country and the World Bank to complete the blue print by
September.

The bottom line of the process, Tanri said, was to restructure
the state-owned companies to make them efficient, profitable and
to boost the potential market value of the companies planned to
be privatized in the future. (rei)