BCA deal unlikely this year: Minister

Berni K. Moestafa, The Jakarta Post, Jakarta

Signaling a further setback in the privatization program, the government said chances were slim for it to secure a deal for the sale of a 51 percent stake in PT Bank Central Asia (BCA) by the end of this year.

Coordinating Minister for the Economy Dorodjatun Kuntjoro- Jakti attributed the delay, in part, to the long talks with legislators when seeking their approval for the sale of BCA's 51 percent stake.

"We have lost precious time and may well not complete the transaction before the end of the year," Dorodjatun said on Wednesday in his opening speech before the participants of the Consultative Group on Indonesia (CGI).

The CGI, grouping together Indonesia's major donor countries, is holding a two-day meeting in Jakarta, which ends on Thursday, to discuss new loans to help finance the country's 2002 state budget.

Failure to complete a deal for BCA this year would become the third delay of its sale since the sale program was launched in early 2000.

The sale of BCA this year is part of the August 2001 Letter of Intent (LoI) signed by the government, which forms the basis of a US$400 million loan package from the International Monetary Fund (IMF).

Under the LoI, the government promises to help cover the 2001 state budget deficit with Rp 27 trillion from proceeds of asset sales and another Rp 6.5 trillion in privatization proceeds.

Last year, the IMF suspended a $400 million loan tranche to Indonesia due to the government's delay of BCA's sale, which had been requested by legislators.

Aside from BCA, the government has also been forced to delay the sale of cement firm PT Semen Padang in West Sumatra due to strong local opposition.

Dorodjatun said that the delay in the sale of the two companies, exemplified the difficulties the government faced in implementing its policies.

"The lesson from both of these cases has been that this government must do a better job of explaining its policies to the House of Representatives and the public.

"This will require leadership, but also a willingness to consult and compromise. This we are ready to do," he said in his speech. Later on he told reporters the government would stick to its plan of selling PT Semen Gresik, Semen Padang's parent company, this year, despite the takeover.

But he added the government wanted to hear out first the aspiration of the people of Padang before making any decisions.

Elsewhere, the IMF's Senior Advisor for the Asia Pacific Department, Daniel Citrin said failure to sell off BCA on time would hurt IBRA's overall revenue target.

"So to the extend that they (IBRA) don't get the money from the BCA sale as planned, they'll have to make up for it in other areas," Citrin told reporters on the sideline of the CGI meeting.