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.