Govt develops fast track privatization

Dadan Wijaksana, The Jakarta Post, Jakarta

The government has developed a fast-track privatization plan in a bid to meet this year's crucial privatization proceeds target, a document from the Office of the State Minister of State Enterprises says.

The document was issued during its meeting with the House of Representatives Commission IX on the state budget and financial affairs last week.

It says that the fast-track privatization program would include state-owned enterprises (SOEs) that could be immediately sold to raise cash for the state budget without lengthy preparations.

The SOEs are those in which the government acts as a minority shareholder or those that are small and medium-sized companies operating in competitive industries, the document added.

Other groups of SOEs slated for sale will be privatized in the medium-term.

These include companies operating in less competitive industries that must first undergo a lengthy restructuring process to increase their value. Falling into this category are companies operating in strategic sectors particularly those serving the public interest.

In addition, according to the document, the government must exclude SOEs operating in public infrastructure, defense and security industries from privatization.

The document did not provide further details.

Under the 2002 state budget, the privatization proceeds target is set at Rp 6.5 trillion (US$665 million) to help finance the state budget deficit, projected at 2.5 percent of gross domestic product.

In the first semester of this year, some Rp 3.5 trillion should have been raised from selling government shares in five SOEs including international call operator PT Indosat, pharmaceutical companies PT Indo Farma and PT Kimia Farma, property company PT Wisma Nusantara International and airport operator PT Angkasa Pura II.

Judging by the nature of those companies, all five should be classified in the fast-track privatization category.

The government has listed 24 SOEs as candidates for this year's privatization program.

So far this year, none of the planned sales has been completed.

During the past two years, the government has failed to meet privatization targets due to a number of reasons, including poor market sentiment and protest from legislators, employees and the public.

The government has announced that it intends to sell up to 45 percent of its shares in the publicly-listed Indosat to foreign investors, hoping to raise at least Rp 4 trillion.

But the plan has been opposed by labor union within the domestic telecommunications' sector. The workers have planned to launch a massive strike if the government does not immediately drop the privatization plan.