DPR has approved Indosat sale: Minister

DPR has approved Indosat sale: Minister

The Jakarta Post, Jakarta

State Minister of State Enterprises Laksamana Sukardi asserted
on Saturday that the House of Representatives (DPR) had approved
PT Indosat's strategic sale as part of the government's
privatization program to reform public companies and help
maintain fiscal sustainability.

Laksamana told the Editors Club that the privatization program
itself had been mandated by the People's Consultative Assembly
(MPR) in 1999 and had since been reaffirmed by the country's
highest legislative body in its annual meetings.

"Law No. 25/2000 on the National Development Program also
firmly stipulates privatization as a concerted effort to
restructure state companies and to optimally raise revenues for
the state," he said.

Moreover, he added, the Law on the 2002 State Budget
stipulates privatization as a major source of revenues, setting
up the program to raise a minimum of Rp 4 trillion (US$450
million) for the budget.

"It is in light of this program that my office held a series
of consultations with House Commission IX (in charge of state
budget, finance and state companies) deliberating which state
companies would be privatized.

"These meetings were concluded on Nov. 19 with a joint
statement signed by myself and the chairman and the three deputy
chairmen of House Commission IX approving the sale of Indosat
together with PT Tambang Batubara Bukit Asam, PT Wisma Nusantara
Indonesia and PT Indofarma," Laksamana asserted.

He made the explanations in reply to the protests from several
House members grouped in the Reform faction, some analysts and
the Indosat employees' union, all of whom opposed the Indosat
sale, arguing that the transaction would cause great losses to
the state and adversely affect the country's telecommunications
industry.

Singapore Technologies Telemedia (STT) won the government's
41.9 percent stake in Indosat on Dec. 15 through an open,
competitive bid by paying Rp 5.6 trillion, which represented a
50.6 percent premium on Indosat's share price on the Jakarta
Stock Exchange.

Laksamana rejected the critics' allegations that the
transaction was not transparent, pointing out that the House and
all other Indosat stakeholders had been thoroughly briefed on the
step-by-step bidding process and on the great benefits the
strategic sale would generate for Indosat, the telecommunications
industry, the state budget and the economy in general.

"Just witness how the market has welcomed the deal, as can be
noted from the strengthening of the rupiah and the bullish
sentiment on the Jakarta Stock Exchange immediately after the
transaction," he said.

He called on critics to come up with real evidence of
corruption or collusion within the transaction.

"I always welcome constructive criticism, rational analyses
and of any deal within the privatization program but please don't
politicize the issue as it would only sabotage the process of
regaining market confidence in the economy," Laksamana appealed.

In fact, he added, it has been his policy to have all
transactions within the privatization program independently
audited to ensure the transparency and accountability of every
deal.

He recalled that there had been a national political consensus
on privatization as far back as the early 1980s under then
Soeharto's administration as one of the most effective ways of
reforming state companies.

Both the government and the House saw privatization as more
imperative than ever after the economic crisis to help maintain
fiscal sustainability, without which even domestic investors, let
alone foreign businesspeople, would not have any confidence in
the economy.

"This can be concluded from the MPR annual meetings which have
always stipulated privatization programs in their rulings," he
said.

Laksamana reiterated that another similarly important
objective of privatization was to break the cycle of corruption
and collusion within state companies.

"As the minister in charge overseeing state companies, I am
fully aware how these companies have become the breeding ground
for corruption and collusion due to strong political pressures
and intervention from senior officials and politicians and other
powerful, vested interest groups."

It is no big surprise then that the powerful groups of people
with vested interests in those companies are trying to sabotage
the sales, because they are afraid of losing their cash cows, he
said.

Laksamana categorically rejected the allegations by some
politicians that privatization amounts to selling the state or
sovereignty to foreigners.

"What we sell are only the shares of a state company or a
claim to dividends, while the state still retains its sovereign
rights to tax and direct the development of the company to meet
the national economic goals through regulations on particular
industries, labor, environment, etc.," he added.

He said one should not forget that when "we sell the shares of
a state company, the new investors acquire the liabilities of
that concern as well."

Referring back to Indosat, Laksamana said Indosat would have
never been able to survive in the telecommunications industry
where the technology has been developing rapidly, especially when
it loses its monopoly of international call service next August,
combined with the entry of state-owned PT Telkom into that
service.

"By allying with STT, Indosat, which is burdened with debts
will have ample, easy access to fresh capital, new technology and
the global network, but its assets will remain in the country,
its employees are still Indonesians and its operations are still
subject to Indonesian regulations.

A strong Indosat will greatly benefit the nation as the state
can collect more value added tax, income tax and dividends to
finance public welfare programs, public services and facilities,"
Laksamana added.

All in all, Laksamana asserted, an efficient, highly
competitive Indosat will greatly benefit the consumers and the
whole economy as telecommunications are now one of the most
important basic infrastructures.