Government to freeze privatization if war erupts

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).