Foreign investors drop plans due to escalating tension

JAKARTA (JP): At least two of eight foreign investors seeking to acquire stakes in 12 state-owned firms have withdrawn their plans due to heightening social and political tensions, a minister said yesterday.

State Minister for the Empowerment of State-Owned Enterprises Tanri Abeng said the worsening situation made it hard for his office to sell the government's stake in the firms.

"It is worth noting that the current situation, especially security, does influence our efforts to go through reformation processes, especially for state-owned enterprises.

"There are several investors who wanted to negotiate with us but then withdrew. At least two have abandoned their plan... including one from a neighboring country," Tanri told media after a ceremony marking the transfer of 159 state firms from various departments and state agencies to fall under his supervision.

In the bloodiest incident in the capital so far, four students from Trisakti University in West Jakarta were killed during a demonstration Tuesday.

Tanri warned that foreign investors still on the list could cancel their plans if the situation did not improve.

The government has planned to make additional divestment in five publicly listed state firms and sell stakes in seven state firms through initial public offerings (IPO).

The listed firms are local telephone operator PT Telkom, satellite operator PT Indosat, cement producer PT Semen Gresik, tin mining firm PT Tambang Timah and nickel and gold mining company PT Aneka Tambang.

The companies being prepared for the IPO are PT Krakatau Steel (steelmaker), PT Pelindo II and PT Pelindo III (port infrastructure and management), PT Jasa Marga (toll roads) PT Perkebunan Nusantara IV (oil palm plantations), PT Tambang Batubara Bukit Asam (coal mining) and PT Angkasa Pura II (airport management).

Tanri said a conducive business climate, especially stability, was a necessary requirement to attract foreign investors to acquire stakes in the state firms.

"If we cannot guarantee stability, no foreign investors will invest in Indonesia."

Tanri said the entrance of foreign investors into the 12 state firms was vital for the country because they would not only bring fresh funds but also attract other foreign investors to follow suit in investing here.

If the situation improved, Tanri said he expected he would sign share purchase agreements with foreign investors to be strategic partners of state firms before December.

Thus far, Tanri said, interest from domestic investors for stakes in the 12 state firms was still minimal because most local firms were currently suffering liquidity problems.

Tanri said that even state firms were suffering serious liquidity problems, especially those with rupiah revenues but burdened by short-term, dollar-denominated debts.

Companies which came under Tanri's supervision yesterday were 36 firms from the Ministry of Industry and Trade, 30 from the Ministry of Finance, 20 from the Ministry of Forestry and Plantations, 18 from the Ministry of Communications, 16 from the Ministry of Public Works and 10 strategic state firms from the Agency for the Assessment and Application of Technology. (rid)