Govt may delay privatization program: Official

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.