Bank Mandiri to initiate IPO amid negative sentiment
Dadan Wijaksna, The Jakarta Post, Jakarta
The management of Bank Mandiri is hopeful that the initial public offering (IPO) of the giant state-owned bank can be carried out in April at the latest, despite market jitters created by ongoing protest over the recent sale of government shares in telecommunications firm PT Indosat.
Bank Mandiri president ECW Neloe stressed over the weekend that as all preparations were nearing finalization, the planned privatization program would be put into action by March or April.
Under the program, the country's largest bank would sell 30 percent of its shares via an IPO on the stock market.
"We're now only awaiting a presidential decree on the IPO, which is still under discussion," Neloe said, adding that the decree would serve as the legal basis of the sale program in the absence of privatization law.
The bank's privatization program was supposed to be completed by December last year, but had to be delayed for various reasons.
The most profound was that the government had to postpone the state assets sales program, pending establishment of the law on privatization.
The Oct. 12 Bali bombings, which killed many foreign holidaymakers in the famous resort island, was another factor in the delay.
Critics have argued that such a special privatization law would be of crucial importance, not only to act as the program's legal basis, but also to avoid a future backlash from the public.
The argument gained some momentum when a nationwide protest broke out following the sale of the government's 41.9 percent stake in publicly listed Indosat to Singapore Technologies Telemedia (STT) late last year.
The protesters had urged the government to cancel the transaction, a move that for some could be seen as protecting national interests, but for others was seen as deterring foreign investors from investing in Indonesia.
It has been against this background that calls from some analysts have mounted for the government to await positive signals before going ahead with the Mandiri privatization plan.
Moving ahead now amid lingering uncertainty would only result in disappointment. It is expected that it would attract minimal interest from investors, and would likely produce low bidding prices.
However, seemingly undeterred by the suggestion, Neloe confirmed his stance on the program, saying, "there will no longer be any delay."
Bank Mandiri is among three companies slated for privatization in 2002, but carried over to this year. The other two are Soekarno-Hatta International Airport operator PT Angkasa Pura I and pharmaceutical firm PT Kimia Farma.
On top of that, the government also plans to sell 10 more state firms this year, with the goal of raising Rp 8 trillion (about US$880 million) to help cover a greater-than-expected 2003 budget deficit due to the Bali bombing.
Proceeds from the privatization program will be used to cover part of the deficit, which the government revised upward to Rp 34 trillion from Rp 26 trillion before the bombings.