BUMNs on offer to strategic investors

BUMNs on offer to strategic investors

JAKARTA (JP): The government is offering to sell several state
companies to strategic partners in addition to the initial public
offering (IPO) plans of eight state enterprises in the April-
December 2000 budget year as part of its privatization program,
according to a senior official at the State Ministry of
Investment and State Enterprises Development.

Herman Sinaga said last week that the move was aimed at
raising cash and restructuring the ailing state-owned companies.

Speaking at a recent Indonesia-Malaysia investment and trade
forum, Sinaga said that the companies to be offered to investors
included cementmaker PT Semen Gresik, port operators PT Pelindo
III and PT Pelindo II, plantation firm PTP XII, design and
construction management service PT Rekayasa Industry and
construction firms PT Hutama Karya and PT Wijaya Karya.

He did not provide details.

The government is currently negotiating with Mexico's Cemex SA
de CV, which recently expressed a strong interest to increase its
investment in Semen Gresik to become the majority shareholder.

Cemex currently owns a more than 25 percent stake in Semen
Gresik, a Jakarta listed company. The government owns 51 percent,
and the remainder is held by the public.

The government is considering to spin off PT Semen Padang, a
subsidiary of Semen Gresik, to avoid friction with Padang people
in West Sumatra, who are strongly opposed to foreign control in
the cement company.

Port operator Pelindo III operates several seaports in Central
Java and East Java and in the country's eastern provinces, while
Pelindo II operates Tanjung Priok port and several other smaller
ports in West Java, Sumatera and West Kalimantan.

According to an investment opportunity booklet issued by the
ministry, Pelindo III is planning several expansion projects.

The first is the expansion of a container terminal at the
Tanjung Emas Port, Semarang, Central Java.

The expansion program is planned for 2000 to 2002 and will
cost approximately Rp 23.7 billion (US$3.18 million).

The government is inviting a strategic partner or partners
with cash, management and marketing expertise to form a new
entity that would own the Semarang container terminal.

The government said that Pelindo III would become a minority
holder in the new joint venture.

This privatization method will also be applied to finance the
expansion program of Pelindo III's other seaports.

The method was also applied by the government last year when
it privatized Pelindo II by selling 51 percent of PT Jakarta
International Container Terminal, the container terminal operator
at the Jakarta Tanjung Priok seaport, to Hong Kong's Hutchison
Whampoa for US$215 million.

Pelindo III is also planning an expansion program for its
container terminal operation at Banjarmasin Port, South
Kalimantan, with a construction period from 2000 to 2002, costing
Rp 70 billion, in anticipation of growing industrial activity in
the province.

The third project is the expansion of the Tanjung Intan
seaport, Cilacap, Central Java, to anticipate the development of
industries and trade activities in the area.

The program will be implemented from 2000 to 2001 with a total
project cost of Rp 23 billion.

The fourth project is to upgrade Benoa Port, Bali, to become a
tourist object. The project is proposed for 2000 to 2002 and is
estimated to cost Rp 20 billion.

The fifth project is the expansion of Kalilamong Port, Gresik,
East Java, to become a cargo port or industrial port. It will
cost from $200 million to $300 million with a construction period
of from 2000 to 2003.

The sixth is the expansion of Tanjung Perak Port, Surabaya,
the capital of East Java. The total project cost is estimated at
$100 million with a construction period between 2000 and 2001.

Opportunities are also provided by expansion of ports under
the management of Pelindo II.

The first is an upgrading of the Bojanegara industrial estate
port, West Java, that is estimated to cost $300 million between
2000 and 2005. The port has a strategic location with access to
international waters.

The expansion program is in anticipation of a rapid
development of the chemical industry as well as other industries
in the areas of Bojanegara, Banten and Cilegon, as well as to be
an alternative and back-up port of Tanjung Priok Port, Jakarta,
which has been experiencing increasing traffic.

The booklet does not provide detailed plans for the other
state enterprises to be offered to investors.

Plantation firm PTP XII is based in East Java and focuses on
tea and cocoa.

The government wants to invite strategic investors that could
help the company to switch the products to more consumer products
and create strong marketing and distribution networks.

Rekayasa Industry has been badly hit by the country's economic
recession as demand for its consultant services decline and the
company has very limited access to the overseas market.

According to a master plan book of state enterprises issued in
1999, the government is considering a joint venture with
international or local partners.

Hutama Karya and Wijaya Karya have also been badly hit by the
economic downturn. Inviting multinational operations is an
alternative to saving the companies.(rei)