Wed, 21 Jun 2000

Govt may sell 25%-35% of its Sucofindo stake

JAKARTA (JP): The government is considering selling 25 percent to 35 percent of its stake in surveyor company PT Sucofindo as part of this year's privatization program, a senior government official said on Tuesday

Secretary to State Minister of Investment and State Enterprises Development I Nyoman Tjager said the government would sell the shares to foreign surveyor firm Societe Generale De Surveillance (SGS), which currently owns 5 percent of Sucofindo.

"We haven't decided yet how much we will sell; it is clear however that SGS does not want to remain at 5 percent," he said on the sidelines of a hearing between the House of Representatives and the state minister.

Nyoman declined to estimate how much in revenue the government might reap from the sale of its shares at Sucofindo, saying no calculations had yet been made.

The government expects to raise some Rp 6.5 trillion (US$755 million) from the privatization of 10 state companies during the April-December 2000 fiscal year.

Nyoman said that increasing SGS participation in Sucofindo would boost its commitment to Indonesia.

SGS, Nyoman said, was a global company and Indonesia would benefit from the company's global network to expand Sucofindo's services abroad.

"For SGS to give Sucofindo business opportunities, SGS wants its portion to be raised," he said.

Sucofindo is a member of SGS and is known for its services in export inspection, certification as well as commodity inspection and trade facilities.

The company teamed up last month with ABX Logistics of Belgium to provide transportation, logistics, warehousing and inspection assessment services to Indonesian companies and their foreign partners.

The government only recently included Sucofindo and trading company PT Kerta Niaga among the 10 state companies earmarked for privatization.

It initially planned to sell only eight state companies to generate the Rp 6.5 trillion.

The government earlier acknowledged that its privatization program in previous years had fallen short of its target.

But Nyoman has said he is optimistic that the target could be met this year.

According to him, Sucofindo and Kerta Niaga will make up only a small percentage of the overall proceeds from the privatization of the 10 companies.

He dismissed calls by some House members to delay the privatization program due to the current sluggish market conditions.

"If we delay the privatization how are we going to get the Rp 6.5 trillion?" Nyoman asked.

Commission IX member Didik Supriyanto was pessimistic that this year's target could be met.

"We might very well recommend the state minister delay the privatization program or at least revise the target," he told reporters on the sidelines of the hearing, which will be continued on Friday.

Didik said foreign investors were still adopting a wait-and- see stance due to prevailing political uncertainties.

He added that many of the state companies to be sold off had yet to be restructured.

"First we must polish the goods (the state companies) and then the timing must also be correct," he explained.

Didik said although it was his commission that initially imposed the target of Rp 6.5 trillion, present conditions called for adjustments.

"When we set the target back then we were hoping that the investment climate would improve," he said.

He also said a wider deficit in this year's state budget was acceptable if it meant saving the state companies from being sold too cheaply. (bkm)