Government to sell 15% of Indosat this fiscal year
JAKARTA (JP): The government will sell only about 15 percent of state-owned international telecommunications provider Indosat this fiscal year, State Minister of the Empowerment of State Enterprises Tanri Abeng said on Tuesday.
Asked about the timetable of the firm's privatization plan, Tanri said it was incomplete.
"We don't know when. We still need more time for preparations," he told reporters on the sidelines of a hearing with the House of Representatives Comission IV on transportation, communications and public works.
The government holds a 65 percent stake in Indosat which made its initial public offering in 1994. It is listed on the Jakarta and New York stock exchanges.
Tanri said Indosat was not the only candidate for the privatization program for the current fiscal year, which will end in March.
Other companies in the transportation, plantation and mining sectors are also prepared to be privatized to follow cementmaker PT Semen Gresik, in which the government last month sold a 14 percent stake to Mexico's Cemex SA de CV.
"These companies have the same opportunity as Indosat's to be the next privatization target," Tanri said.
Indosat and mining operations PT Tambang Timah and PT Aneka Tambang, port operators PT Pelindo II and PT Pelindo III and plantation firm PT Perkebunan Nusantara (PTP) IV are among of the 10 state-owned companies scheduled to be privatized in the current fiscal year to raise about US$1 billion to help bridge the State Budget deficit.
The government initially planned to privatize 12 state-owned companies in the hope of raising $1.5 billion. It subsequently backed down, citing the bearish market condition and regulatory obstacles as the primary reasons.
Tanri said the government would first boost the value of Indosat before a further divestment through acquisition of companies that would enhance business synergy.
"They (the companies) are now in a due diligence process."
He added that the government was also preparing a new telecommunications law which would abolish monopoly practices.
The government early this month decided to cancel the privatization plan for domestic telecommunications operator PT Telkom due to the untoward capital market condition.
Tanri said the economic crisis had badly hit most state-owned companies except for those in the export, mining and agricultural sectors.
He believed that plantation companies, including PTP IV, would do well this year, with financial performance expected to be three times better than 1997.
Construction firms
Tanri also said that ailing state-owned construction companies under the Ministry of Public Works would be immediately restructured.
The move is part of the prioritization to restructure and bail out troubled but strategic state-owned companies, he added.
"We will restructure the troubled companies, including by merging them and inviting foreign strategic partners."
Tanri explained that the construction companies -- including PT Nindya Karya, PT Adi Karya, and PT PP -- were floundering in the crisis because owners of completed construction projects could not pay them. Seeking new projects was an impossibility, he added.
He said the companies had resorted to taking bank loans to maintain cash flow.
"But it will be impossible to go on with interest rates soaring to 70 percent."
"We need to bail out these companies, not only to save the machinery and construction, but because we have managed to develop human resources capability in this sector."
Tanri told the House that the precedents for the restructurization of troubled but strategic companies were state electricity company PT PLN and national flag carrier Garuda Indonesia. (rei)