Economists oppose privatization plan
Economists oppose privatization plan
Dadan Wijaksana, The Jakarta Post, Jakarta
In another campaign against the sale of state assets, a
coalition of economists has urged a halt in government
privatization and divestment programs, at least until the
formation of a new government resulting from the upcoming general
elections.
The group, calling itself Indonesia Bangkit (Indonesia
Awakens) consists of around 35 prominent economists. It told the
media on Tuesday that such an approach was needed to preserve and
safeguard state assets -- something that has yet to be achieved
by the current government.
"The public and legislators should plead for a temporary
moratorium on asset sale programs to avoid further losses, both
economical or non-economical," spokesman of the group Rizal Ramli
said.
He pointed at the planned sale of a majority stake in state-
owned Bank Negara Indonesia (BNI) as an example of how the
government was always in a rush to sell assets with the aim of
meeting the needs of the state budget, without paying much
respect to history.
"Especially if a majority stake in BNI is offered to
foreigners. This is just as bad as destroying the country's
profound history in return for cheap money from foreigners," he
added.
The government is finalizing its preparations for selling off
a 51 percent stake in BNI -- the country's second-largest lender
-- via a private placement mechanism, as part of this year's
privatization program.
The proceeds will be used to help plug the 2004 budget
deficit, which has been earmarked at Rp 24.4 trillion, or 1.2
percent of gross domestic product (GDP).
For this year the privatization program is targeted to rake in
Rp 5 trillion (US$595 million) in proceeds.
Apart from the proceeds, the government also expects other
benefits arising from the privatization program, which is
allowing state-owned enterprises -- notorious for their culture
of corruption -- to perform at higher level of transparency,
efficiency and professionalism.
Rizal, a former chief economics minister, disagreed, however,
with that argument.
Not that he was against sales of assets, Rizal added, but he
preferred only a minority rather than a majority stake to be
sold.
"The majority ownership of Indonesia's banking system by
foreigners will affect the monetary authority's ability to
formulate and execute monetary policy and credits," said Rizal
without elaborating.
Equally important was the fact that the sale of BNI would be
made when the bank's image has been severely damaged by the
revelation of a Rp 1.7 trillion lending fraud, which would
provide potential investors with a reason to offer a low bidding
price.
"The government, rather than trying to improve BNI's
performance under its supervision, is instead selling the bank as
quickly as possible," Rizal said, adding that under current
circumstances, the bank was worth at most only 1.5 times its book
value, estimated at around Rp 5 trillion.
Rizal also said that since BNI still held a large chunk of
government bonds (injected into the bank to help improve its
capital situation following the late 1990s financial crisis), the
bank would continue to receive Rp 3.5 trillion to Rp 4 trillion
per annum in interest rate payment from the government.
"If the (BNI) sale materializes, the (privatization) proceeds
will be used up in two years simply by paying the interest on
recap bonds," Rizal said.
BNI holds around Rp 44 trillion-worth of recap bonds.
The Indonesia Awakens forum groups together around 35 economic
experts from various institutions. Included are Didik J.
Rachbini, Hartoyo Wignyowiyoto, Revrisond Baswir, Sri Edi
Swasono, Aviliani and Dradjat Wibowo.