Government fails to meet first half privatization target
The Jakarta Post, Jakarta
The government is unable to meet the target for proceeds from the first semester of privatization of around Rp 3.25 trillion (US$346 million), as promised to the International Monetary Fund, due to a delay in the privatization of several state-owned enterprises (SOEs), according to a senior official.
But Mahmudin Yassin, deputy for privatization at the Office of the State Minister of State Enterprises, expressed optimism that the government could still raise around Rp 2 trillion in the next two months from the sale of shares in international telecommunications firm PT Indosat and property company PT Wisma Nusantara.
"It will probably only be around Rp 2 trillion, obtained from the sale of Indosat and Wisma Nusantara," he was quoted by Antara as saying on Monday.
He said that the government had to delay the privatization of several SOEs including pharmaceutical companies PT Indofarma and PT Kimia Farma, port operator PT Angkasa Pura II, and coal mining firm PT Tambang Batubara Bukit Asam because more time was needed to complete the sale process.
He did not elaborate.
He only said that the sale of shares in Bukit Asam was due to a new plan in which the company may form a consortium with other SOEs to participate in the bidding for a 51 percent stake in East Kalimantan-based coal mining giant PT Kaltim Prima Coal.
But analysts have said that growing protests against the government privatization program and unfavorable market conditions have contributed to the delay.
The government is targeted to raise Rp 6.5 trillion in privatization proceeds this year in a bid to help finance the 2002 state budget deficit projected at around 2.5 percent of gross domestic product. So far the result is zero.
During the past two years, the government has failed to meet its privatization target, partly due to widespread protests from employees of SOEs, politicians and members of the public.
But Mahmudin is optimistic that the 2002 privatization target can be reached.
He said his office was currently in the process of selecting investors for the Wisma Nusantara office building.
He said that the Japanese Mitsui Corporation, which already owns shares in Wisma Nusantara, was willing to purchase the government's 42 percent stake, but the price being offered fell short of government expectation.
Reports said earlier the government wanted a price of around Rp 400 billion.
The government is also planning to sell a 15 percent stake in publicly listed Indosat in June through a placement, and another 30 percent in October via a strategic sale, hoping to raise between Rp 4 trillion and Rp 5 trillion. Proceeds from the first tranche sale is expected to reach Rp 1.7 trillion.
Mahmuddin said that Indosat is now near a deal with Germany's Deutsche Telekom to purchase the latter's 25 percent stake in Indonesia's second largest cellular operator PT Satelindo.
Indosat already owns a 75 percent stake in Satelindo, and the purchase of the remaining shares should help increase the value of Indosat prior to its privatization program.
Mahmudin said the government will sell a 50 percent stake in Kimia Farma, but only 30 percent would be released in the first stage. The proceeds from this sale are expected to reach Rp 400 billion.
The government has also said it will sell a 14 percent stake in Indofarma. It initially planned to sell a controlling 51 percent stake in the company to raise around Rp 350 billion, but later decided to shrink the size of the offering to ensure the company would still produce cheap medicine for the poor.
The government will also sell a 49 percent stake in Angkasa Pura II, the operator of Jakarta's Soekarno-Hatta International Airport, hoping to raise around Rp 1.5 trillion.
The planned sale of a 35 percent stake in South Sumatra-based Bukit Asam is also expected to rake in Rp 1.5 trillion.