Bank Mandiri merger to be completed by May

Bank Mandiri merger to be completed by May

JAKARTA (JP): The president director of Bank Mandiri, Robby
Djohan, plans to complete the merger process of the four state
banks into the institution he now heads by May instead of the
original target date of sometime in 2000, Antara reported.

State Minister of the Empowerment of State Enterprises Tanri
Abeng was quoted by the news agency as saying on Saturday that
"two years is too long" for the merger process.

Bank Mandiri was established last year to take over the assets
of Bank Dagang Negara, Bank Bumi Daya, Bank Exim and Bank
Pembangunan Indonesia. All four ailing state banks have been
rated category C by the bank monetary authority, with capital
adequacy ratios (CARs) of less than minus 25 percent.

Tanri was reluctant to give details about the acceleration of
the merger process, but said that one of the main considerations
was the government's regulation that banks with CARs of less than
four percent must cease operations as of the end of January 2000.

Publicly listed banks must comply with the minimum CAR
requirement by the end of March this year.

Tanri also disclosed Bank Mandiri's plan to create a "Senior
Bankers Committee" comprising directors of the four merged banks
who are not on the board of directors. They will assist in the
settlements of the bad debts inherited from their banks.

Tanri, who spoke during a breaking of the fast with
journalists, also discussed the government's privatization
program in the 1998/99 fiscal year which ends on March 31.

He explained that only seven of the original 12 state
enterprises earmarked for the program will have been privatized
by the end of the current fiscal year.

So far, only PT Semen Gresik has been privatized.

Six other state enterprises that are expected to be privatized
before April are port operators PT Pelindo II and PT Pelindo III,
telecommunications firm PT Indosat, plantation firm PT Perkebunan
Nusantara IV, coal mining firm PT Aneka Tambang and airport
management firm PT Angkasa Pura II.

The privatization of the other five state firms will be
completed in the next fiscal year.

Under the privatization scheme, foreign investors were invited
to buy equity in state enterprises, providing badly needed cash
for the government as well as introducing new technology to the
enterprises, Tanri said.

Besides financial strength, foreign investors also had better
access to foreign credit and export markets, he said.

The government, however, intended to remain the majority
shareholder in all these companies, he added.

Tanri's proposal last year to sell 51 percent equity in Semen
Gresik drew widespread public criticism accusing the government
of engaging in a massive sell off of the country's economic
assets.

Tanri assured the public that this would not be the case.

"In spite of strong pressure to raise funds through the
privatization program, the government intends to remain the
majority shareholder. Foreign investors were invited to
participate as strategic partners," he said on Saturday.

Herwidiyatmo, Tanri's Deputy for Restructuring and
Privatization, said besides buying equity foreign investors could
buy convertible bonds which would be issued by state enterprises.
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