Government to raise Rp 8t in privatization proceeds
Fitri Wulandari, The Jakarta Post, Jakarta
The government said on Tuesday it could rake in around Rp 8 trillion (US$946.74 million) in privatization proceeds this year, higher than its target of Rp 6.1 trillion.
"... We can get Rp 8 trillion by the end of this year," Mahmudin Yassin, deputy for privatization and restructuring at the Office of the State Minister for State Enterprises, said.
He said the higher privatization revenue was due to the successful initial public offering (IPO) of state-owned Bank Rakyat Indonesia (BRI).
The upcoming IPO of state-owned gas utility PT Perusahaan Gas Negara (PGN) in December was also expected to be successfully completed, he said.
The government has sold stakes in a number of state-owned enterprises as part of a privatization program to raise cash to help finance this year's state budget deficit.
At present, the government has collected a total of Rp 3.6 trillion. Some Rp 2.5 trillion came from the IPO of state-owned Bank Mandiri in August, while the remaining Rp 1.1 trillion was from the sale of shares in publicly-listed cement producer PT Indocement.
The IPO of Bank BRI, which started on Monday and would be completed on Wednesday, is expected to raise a record Rp 4.17 trillion in proceeds, of which Rp 2.6 trillion would go into the state coffers, while the remainder would go to the bank.
The IPO, which is the country's largest since the 1997 economic crisis, has received strong interest from investors both at home and overseas.
The government is now preparing to sell shares in PGN, hoping to raise between Rp 1.5 trillion and Rp 2 trillion.
The relatively successful IPO of the state-owned companies was in contrast to last year's privatization program, which generally failed to garner sufficient interest due to various factors such as strong opposition from the public and poor preparation.
The government has insisted that privatization of state-owned companies was a crucial program not only to provide cash for the state budget, but also to boost good corporate governance in the companies, which had long been treated as the cash cows of well- connected people.
Privatization proceeds will become a more important source of revenue for the government in the future, particularly as the country would no longer be eligible to certain financing facilities from the Paris Club of creditor nations after the International Monetary Fund ends its program here by the end of this year.
In 2004, the government hopes to raise Rp 10 trillion from selling state-owned enterprises, as stated in its draft 2004 state budget.
Elsewhere, Mahmudin said the government might approve a proposal from the PGN management to raise the size of the IPO to 39 percent of total shares from the initial plan of 30 percent to ensure sufficient proceeds for the company to help finance its gas pipeline construction projects.
The House of Representatives has previously only approved the sale of 30 percent shares in PGN.