Government to hire consultants to resturcture state firms
Government to hire consultants to resturcture state firms
JAKARTA (JP): The government will hire six foreign consulting
firms to help consolidate the country's 159 state companies into
10 holding companies.
State Minister of Empowerment of State Enterprises said here
on Thursday that there were nine foreign consulting companies on
the selection list, including Booz Allen & Hamilton Inc., AT
Kerney, PricewaterhouseCoopers, McKenzie & Co. and Boston
Consulting Group Inc.
"Last night (Wednesday) we started evaluating the six foreign
consulting firms that will be hired to help us with the due
diligence to establish a consolidation framework for the state
firms," he said.
Tanri said that in under a week his office would have made a
decision about which foreign consultants would be hired.
Tanri has set a September target for the consolidation of the
state firms into 10 holding companies.
He said the first phase of the consolidation process will be
reported to the International Monetary Fund (IMF) and the World
Bank for discussion.
Sri Mulyani Indrawati, a critical economist, commented that to
her knowledge the World Bank had not agreed to the government
project to establish holding companies for state firms, because
the move would hinder the government privatization program.
"The World Bank still does not understand the concept of
holding companies for the state firms and why it would be more
beneficial," Sri said on Thursday.
She said the creation of holding companies could prove more
costly, as the holding company would do little but charge fees in
a "rent seeking" manner to operating companies under its
umbrella.
"I am also particularly concerned for a number of strategic
industries that are not fit to be merged together under one
holding, but the government has forced them into the
consolidation program."
Tanri has argued that the creation of holding companies would
raise the sale price of the state firms under the privatization
program.
He said, however, that privatization efforts remained a
priority over the state firms consolidation project.
"The privatization process still continues, while we are
restructuring the state firms by consolidating them into big
holding companies of global capacity."
The government has set a target of US$1.5 billion in
privatization proceeds in the current 1999/2000 fiscal year.
It has so far raised nearly $800 million from the
privatization program.
Government stakes for sale through privatization include
Jakarta international airport operator PT Angkasa Pura II,
plantation firm PTP IV, fertilizermaker PT Pupuk Kaltim, publicly
listed telecommunications firms PT Indosat and PT Telkom
Indonesia and mining firm PT Aneka Tambang.
The government first announced the plan to consolidate state
firms into 12 to 15 holdings in early May.
In the latest development the government decided to
consolidate them into 10 holding firms.
Those holdings are financial services, agroindustry and
consumer goods, energy, tourism, telecommunications and media
business, strategic industries, logistics, mining, construction
and building materials and forestry (including paper and timber
related products). (udi)