Government to sell 15% of Indosat this fiscal year

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)