Govt may delay privatization program: Official

Rendi A. Witular, Jakarta

The government may delay the sale of shares in a number of state-owned firms, including giant Bank Mandiri, this year, due to current uncertainties in the financial market, according to a senior official.

"Mandiri is still on the list for privatization. Timing is very important during this process. We may delay it until next year if the market remains unsuitable," said Mahmuddin Yasin, deputy for privatization at the Office of the State Minister of State Enterprises, after a closed-door meeting on Thursday with the House of Representatives subcommission overseeing the privatization program.

The government plans to sell 10 percent of its stake in Mandiri in the second semester of this year.

At present, the government holds a 70 percent stake in the bank, after successfully selling a 20 percent shareholding via an initial public offering (IPO) last year, and another 10 percent in a secondary offering in March of this year.

But Mahmuddin refused to confirm whether the delay in the privatization program would cause the government to be unable to meet this year's privatization proceeds target of Rp 5 trillion, which is crucial to help finance the 2004 state budget deficit.

So far this year, the government raised around Rp 3.6 trillion from the sale of a 10 percent stake in Mandiri in March, and the sale of shares in small consultancy companies.

The local capital market has been on a roller-coaster ride during the past few weeks, sending the rupiah tumbling to a 19- month low, and stocks falling by 12 percent from a historical high in April as investors switched from rupiah-based to dollar- based assets amid expectations of a rise in U.S. interest rate, and economic and political uncertainty here.

This uncertainty has also forced the government to cancel a planned Rp 3.5 trillion bond issue on Tuesday as investors demanded overly high yields due to the rising uncertainty.

Meanwhile, lawmaker Muchtar Noerdjaya, who heads the House subcommission, said that the House might also issue a recommendation for a delay in this year's privatization program due to economic uncertainty both at home and globally.

"We will discuss with the government next week the possibility of delaying some privatization programs," Muchtar told The Jakarta Post following the meeting.

"Timing is the most important factor that must be taken into consideration. We don't wish to sell state assets and obtain small returns. It's better to delay the program at the moment, pending better market conditions," said Muchtar.

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

The companies to be sold this year include pharmaceutical companies PT Kimia Farma and PT Indo Farma, where a majority stake will be sold through private placement to strategic investors.

IPOs are planned for fertilizer producer PT Pupuk Kaltim and state plantation firms PT Perkebunan Nusantara III, IV and V.

Shares in gold and nickel producer PT Aneka Tambang, tin producer PT Timah, coal producer PT Tambang Batubara Bukit Asam, Bank Mandiri and Bank Rakyat Indonesia will also be offered through secondary market offerings.

Also to be put on offer are shares in national flag-carrier Garuda Indonesia, airline operator Merpati Nusantara, port operators PT Angkasa Pura II (Soekarno-Hatta International Airport, Jakarta) and PT Angkasa Pura I.