Consultant calls for faster privatization

Consultant calls for faster privatization

JAKARTA (JP): The government should accelerate its
privatization program to help revive foreign investor confidence
in the crisis-hit economy, a World Bank consultant has said.

Peter Scherer said on Thursday that international investors
have shown considerable interest in the privatization program
because they have confidence in the future of Indonesia.

"They're willing to pay a premium above present market
capitalization," he said, pointing to the recent privatization of
cement manufacturer PT Semen Gresik and the postponed sale of PT
Krakatau Steel.

Scherer, an expert in privatization with experience in Latin
America, was speaking at the Indonesian Forum conference.

"If there was the political will, one could overcome some of
the resistance that is obviously slowing down the privatization
program," he said.

The government has backed down from its initial plan to sell
12 state-owned companies to raise approximately US$1.5 billion in
the current fiscal year. Delays in the program have been blamed
on bearish conditions in the local capital market in recent
months.

The government now expects to raise only $1 billion from the
sale of state assets in this financial year.

So far, the government has only managed to sell a 14 percent
stake in PT Semen Gresik to Mexico's Cemex SA de CV. It was
initially planned to allow the Mexican firm to purchase a
majority stake in Gresik, but this was changed following protests
from certain groups.

Scherer explained that the privatization program would help
revive the badly needed foreign investor confidence in the
country.

He said that rebuilding confidence would be an important step
towards restructuring the country's massive private sector
overseas debt.

"With the debt overhang it is difficult for companies to get
fresh financing," he pointed out. (rei)