Govt develops fast track privatization

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.