Government to restart PT Indofarma tender

Government to restart PT Indofarma tender

Dadan Wijaksana, The Jakarta Post, Jakarta

The government has put on hold its plan to sell state-owned
pharmaceutical firm PT Indofarma due to a lack of bidders, State
Minister for State Enterprises Laksamana Sukardi said on Tuesday.

Laksamana said that of the three consortia that had been vying
for a 46 percent stake in the company, two had pulled out of the
bidding process.

"According to reports I received, two bidders have quit, which
leaves only one remaining bidder. Because of that, calls for the
tender to be postponed will be considered.

"I think the tender process has to be conducted all over
again," Laksamana said, while refusing to name the two bidders
who withdrew from the process.

At the end of last year, Sunny Corporation from China,
Washington Soul Pattison Ltd. from Australia and Korindo from
South Korea were the three listed consortia bidding for
Indofarma.

Indofarma was among four state companies scheduled for sale
last year as part of the privatization program, but the sales
were moved back to 2003 because of various technical problems.
The other three companies are airport operator Angkasa Pura II,
which controls Soekarno-Hatta International Airport,
pharmaceutical firm Kimia Farma and Bank Mandiri, the country's
largest bank.

The four will join 10 other state firms listed for sale this
year, which the government hopes will bring in at least Rp 8
trillion that can help plug the 2003 budget deficit, projected at
Rp 34 trillion, or 1.8 percent of gross domestic product.

Although Laksamana's remarks about Indofarma do not mean the
permanent cancellation of its sale, it should provide more
ammunition for those opposed to the privatization program.

Despite the need to raise money to help finance the cash-
strapped state budget, opposition to the privatization program
has been increasing. Many lawmakers have joined in this chorus of
criticism.

They say selling national assets in the current unfavorable
investment climate is not the answer to filling the budget gap.
These critics have urged the government to cancel the
privatization program until after the 2004 elections, which would
also provide the necessary time to pass a special law on
privatization and the sale of state assets.

Legislators argue that after the elections, which are expected
to improve stability, investor confidence in the country will
improve, increasing interest in national assets and guaranteeing
better prices.

However, the immediate impact of such a delay would be to
further harm investor confidence in the government's commitment
to economic reform.

Privatization is not only aimed at raising cash for budgetary
purposes, but equally important is also meant to restructure the
country's strategic state industries to perform at the highest
possible levels in the face of increased global competition.