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.