Five state firms up for sale soon

Five state firms up for sale soon

The Jakarta Post, Jakarta

The government confirmed on Monday plans to sell its stakes in
five firms to meet the privatization target of Rp 3.5 trillion
(some US$340 million) for the first half of the year, State
Minister of State Enterprises Laksamana Sukardi said on Monday.

The five are among 24 companies the government has pledged to
privatize this year.

The state-owned companies in question are international call
operator PT Indosat, pharmaceutical companies PT Indo Farma
and PT Kimia Farma, property company PT Wisma Nusantara
International and airport operator PT Angkasa Pura II.

Of the five, the government expects the highest proceeds will
come from the sale of government shares in Indosat, which will be
sold in two stages, first through private placement and then
followed by a strategic sale of shares to investors.

The government has targeted the raising of some Rp 1.7
trillion from Indosat through selling off stakes of between 14
percent and 15 percent during the first stage in June.

This will be followed up with a further sale to a strategic
investor in October, bringing the total amount of Indosat shares
sold to 45 percent.

The government currently owns 65 percent of the company.

Earlier this year when the government first floated the plan
to sell its majority stake in Indosat, seven international
telecommunications companies reportedly expressed interest in
buying stakes.

They were Australia's Telstra Corp Ltd, Vodafone Airtouch Plc,
France Telecom's mobile unit Orange SA, Hutchison Whampoa Ltd,
Telekom Malaysia, Singapore Telecommunications Ltd, and British
Telecommunications Plc.

Analyst Lin Che Wei told The Jakarta Post that while it was
still too early to be optimistic about the privatization target,
he was of the opinion that Indosat would definitely draw the most
attention.

As for other firms, Laksamana said at a hearing with the House
of Representatives' Commission V on state firms that the
government planned to sell a majority stake in Kimia Farma but
would retain its controlling shares in Indo Farma.

The proceeds target from privatization this year has been set
at Rp 6.5 trillion, to be used partly to plug the deficit in the
state budget in line with the government's latest commitment to
the International Monetary Fund (IMF).

As was the case last year, the country will be relying this
year on earnings from privatization and the sales of assets
controlled by the Indonesian Bank Restructuring Agency to keep a
manageable deficit of 2.5 percent of gross domestic product.

However, the government's poor track record in privatization
has cast doubts over whether or not the program will be capable
of producing the targeted proceeds.

Last year, the government only managed to sell shares in the
domestic telephone monopoly, PT Telkom, and got Rp 3.5 trillion,
far below the Rp 5 trillion target.

The government has so far failed to divest controlling stakes
in cement producer PT Semen Gresik and the country's largest
retail bank, Bank Central Asia.

In fact, nine of the 24 companies that appear on the
government's privatization list for 2002 were actually supposed
to be sold off last year.