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.