Government to raise Rp 8t in privatization proceeds

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.