Government to freeze privatization if war erupts
The Jakarta Post, Jakarta
The government would be forced to temporarily halt its privatization program if a war breaks out in Iraq, the deputy head of the Office of State Minister of State Enterprises, Mahmudin Yasin, said Wednesday.
He said war would scare investors and it would be impossible for the government to sell assets in such a bearish financial market.
"If tomorrow the war erupts, then forget it (privatization). Until when? Nobody can predict," he was quoted by detik.com as saying.
The government has planned to sell a number of state-owned enterprises (SOEs) this year in a bid to raise Rp 8 trillion (about US$880 million) to help finance the 2003 state budget deficit, which is projected to be Rp 34 trillion.
Mahmudin did not say what alternatives would be taken by the government if the privatization proceeds target could not be met.
Among the SOEs slated for immediate sale are the giant Bank Mandiri and pharmaceutical firm PT Indofarma, both scheduled for privatization in the first semester of this year.
The government has been facing difficulties in carrying out the crucial privatization program, mainly due to strong opposition politicians and other vested interest parties who do not want to see foreign investors take control of the country's SOEs.
The sale of a government stake in state-owned telecommunications company PT Indosat to Singapore Technologies Telemedia last year was heavily criticized, partly due to the lack of transparency and alleged irregularities.
A number of legislators are planning to set up a special team to investigate the transaction.
Some legislators had also previously insisted the government not proceed with the privatization program pending the approval of a special law on SOEs, including a clause on the divestment process of state assets.
It is not yet clear when the House can complete deliberating the proposed law, but some government officials are hoping it can be done by May.
The government has said that privatization is not only aimed at raising cash for budgetary purposes, but it is also aimed at restructuring the country's strategic industries so they can perform at a high level of efficiency, a move which would prove helpful in the globalization era.
List of 2003 privatization program: Bank Mandiri (bank), Bank Rakyat Indonesia (bank), PT Indofarma (pharmaceutical firm), PT Angkasa Pura I (airport operator), PT Perusahaan Gas Negara (gas distributor), PT Danareksa (investment bank), PT Adhi Karya (consultancy firm), PT Pembangunan Perumahan (property developer).