Dadan Wijaksana

Dadan Wijaksana
The Jakarta Post
Jakarta

The government is banking on the sale of more than 14 state-
owned firms this year to meet a Rp 5 trillion (US$580 million)
target from privatization proceeds, a deputy minister said on
Wednesday.

Deputy to the State Minister for State Enterprises Mahmuddin
Yasin said the companies would be sold through various schemes,
such as private placement to strategic investors, initial public
offerings (IPOs), and secondary public offerings. The last two
involve selling stakes at the stock market.

Mahmuddin however did not provide the timeframe for the sale
of each company, nor the size of the stake in the companies to be
put on offer, reported Dow Jones.

The government is relying on proceeds from the privatization
program to help cover the state budget deficit, which for this
year has been set at Rp 24.4 trillion or 1.2 percent of the
country's gross domestic product (GDP).

Aside from contributing to the budget, the privatization
program will help develop transparency, efficiency and
professionalism in state-owned enterprises, most of which have
been criticized for their inefficiency and corrupt culture.

In terms of proceeds, last year was a successful year for the
privatization program.

Through the program, the government managed to rake in Rp 7.4
trillion, surpassing an initial target of Rp 6.2 trillion. The
proceeds came from the sales of stakes in four state companies,
that is Bank Mandiri (20 percent), Bank Rakyat Indonesia (40.5
percent), cement maker Indocement (16.9 percent) and natural gas
distribution company Perusahaan Gas Negara (39 percent).

Nevertheless, a combination of stiff public opposition,
sometimes driven by vested interests, and a lack of preparation
on the part of the government has often put the program at the
center of fierce debates, stalling the progress in a number of
sale programs.

Elsewhere, Mahmuddin said that the companies to be sold this
year include pharmaceutical companies Kimia Farma and Indo Farma,
where a majority stake will be sold through private placement to
strategic investors.

IPOs are planned for fertilizer producer Pupuk Kaltim, state
plantation firms PT Perkebunan Nusantara III, IV and V.

Shares of gold and nickel producer Aneka Tambang, tin producer
Timah, coal producer Batubara Bukit Asam, Mandiri and BRI, will
also be offered through secondary market offerings.

Also to be put on offer are shares in national flag carrier
Garuda Indonesia, airline operator Merpati Nusantara, port
operators Angkasa Pura II (Soekarno-Hatta International Airport)
and Angkasa Pura I (Salaparang).

Other smaller firms on offer are Adhi Karya, Iglas and
Intirub.

For this year, privatization proceeds is becoming a more
important source of revenue for the government in the future,
particularly as the country is no longer eligible to certain
financing facilities from the Paris Club of creditor nations
after the International Monetary Fund (IMF) ended its special
lending program here by the end of last year.