BPKP head finds privatization program weak
JAKARTA (JP): Head of the Financial and Development Comptroller (BPKP) Arie Soelendro said on Wednesday the government privatization program had been weak in its planning and supervision, causing the state to suffer some US$37 million in losses.
Arie said the weakness was reflected in the absence of a competent cost-benefit analysis in deciding which state enterprises are to be privatized and poor guidance in hiring privatization consultants and related expertise used in the privatization program.
"In addition, there was no ceiling set for the cost of privatization which should have been decided by the Ministry of Finance," he said during a hearing with the House of Representatives Commission IX for financial and development planning affairs.
Arie was referring to the privatization of state-owned port operators PT Pelindo II and Pelindo III, domestic telecommunications operator PT Telkom, cement maker PT Semen Gresik and the divestment of government ownership in private- owned instant noodle giant PT Indofood Sukses Makmur, which were conducted in the previous budget year.
He said in addition to the financial loss, the shortcomings in the privatization program had caused wasteful spending of Rp 74.92 billion plus $6.19 million, and an opportunity loss of Rp 44.90 billion plus $876,670.
Arie did not elaborate on the figures.
Many analysts have criticized past government privatization programs, particularly due to their lack of transparency.
The government privatized state enterprises in a bid to raise cash to help finance the state budget.
The government planned to privatize between eight and 10 companies this year to raise some Rp 6.5 trillion in proceeds but so far none have been realized.
The current unfavorable market condition and domestic political instability are among the factors seen impeding the privatization program.
Finance ministry officials have said the privatization program for this year had been shelved.
The government has said it would continue the privatization program next year to raise some Rp 5 trillion.
The companies which are in the pipeline for privatization this year include pharmaceutical firm PT Indo Farma, fertilizer firm PT Pupuk Kaltim, plantation companies PT Perkebunan IV and PT Perkebunan III, general mining company PT Aneka Tambang, airport operator PT Angkasa Pura II and coal mining firm PT Bukit Asam.
Arie also said a total of Rp 54.56 trillion of Bank Indonesia's emergency liquidity support (BLBI) was misused but it should not become the burden of the government or state budget.
"The results of our investigative audit shows there have been irregularities in the utilization of the emergency liquidity support worth Rp 54.56 trillion before Jan. 31, 2000," he said during a hearing with a lower house commission.
He said the Attorney General's office was currently investigating the case.
Arie also added the results were based on the audit of 42 closed banks that were given the BLBI facility.
The State Supreme Agency (BPK) had earlier said that out of the Rp 144.5 trillion BLBI channeled by the government via Bank Indonesia, some Rp 138 trillion had been misused by recipient banks due to the weak supervision of the central bank. BPK audited a greater number of banks.
The government injected the BLBI via the central bank primarily to help banks pay depositors amid massive bank runs, particularly in 1998 and 1999.
The government is supposed to issue bonds to Bank Indonesia to cover the BLBI but it countered that the central bank should be responsible for the liquidity support which had been misused.
Bank Indonesia, however, insisted the BLBI facility was a government program and therefore the state budget should cover the cost, not the central bank.
The government and Bank Indonesia have formed a special team to settle the dispute over the controversial BLBI facility. (rei)