Govt cancels privatization of SOEs, except BNI

Govt cancels privatization of SOEs, except BNI

Rendi A. Witular, Jakarta

The government has decided to delay the sale of shares in a
number of state-owned enterprises (SOEs) this year, as the
current administration's term will end in October.

The sale of a 30 percent stake in publicly listed Bank Negara
Indonesia (BNI), however, is still expected to take place before
the next government is sworn in, said Mahmuddin Yasin, deputy of
privatization at the Office of the State Minister for State
Enterprises.

"BNI is still on the list for privatization this year. As for
the other SOEs, we plan to shelve them until next year," said
Mahmuddin, before a closed-door meeting on Tuesday with a House
of Representatives commission overseeing the state budget.

SOEs to be affected by the delay include airliner PT Merpati
Nusantara and tin miner PT Timah.

Mahmuddin said the delay was caused by the limited time
remaining until October, as regulations required the government
and the House to first issue an approval for the SOE sales.

The country is preparing for the election runoff on Sept. 20,
when President Megawati Soekarnoputri will vie for the presidency
against her former chief security minister Susilo Bambang
Yudhoyono.

Current House members will conduct their last session on Sept.
30, while the government will leave office starting Oct. 10, and
a new government will be sworn in on Oct. 20.

Mahmuddin, however, said the delay in the privatization
programs for other SOEs would not cause the government to fail in
meeting this year's Rp 5 trillion (US$555 million) target, as it
expected to raise huge proceeds from the BNI shares sale.

The government plans to seek approval from House Commission IX
for financial affairs next week, with a view to selling BNI
shares in October, he said.

So far, the government has raised about Rp 3.6 trillion from
the March sale of a 10 percent stake in Bank Mandiri and the sale
of shares in small consulting firms and several mining companies.

The government had planned to sell state companies under this
year's privatization program through various schemes, such as
private placements to strategic investors, initial public
offerings (IPOs) and secondary public offerings.

SOEs initially planned to be sold this year were:
Pharmaceutical companies PT Kimia Farma and PT Indo Farma to
strategic investors; fertilizer producer PT Pupuk Kaltim and
state plantation firms PT Perkebunan Nusantara III, IV and V
through IPOs; and shares in gold and nickel producer PT Aneka
Tambang, tin producer PT Timah, Bank Mandiri and Bank Rakyat
Indonesia through secondary public offerings.

Shares in Merpati, Danareksa and airport operators PT Angkasa
Pura II and PT Angkasa Pura I were also planned. Angkasa Pura II
manages Soekarno-Hatta International Airport.

Mahmuddin said the government had to cancel the privatization
of Merpati this year, as the management had not yet completed the
company's debt restructuring program.

The company is indebted Rp 1.3 trillion as of last year, with
assets standing at a mere Rp 800 billion.

Danareksa's sale to strategic investors was also delayed
because of an unfinished debt restructuring program.