Govt says it won't be able to meet privatization target
Govt says it won't be able to meet privatization target
Dadan Wijaksana, The Jakarta Post, Jakarta
The government conceded on Tuesday that it was unlikely to meet
its target of raising Rp 8 trillion (about US$970 million) in
privatization revenue for this year due to a mixture of internal
and external factors.
Deputy of the Office of State Minister of State Enterprises
Mahmuddin Yasin told reporters that the government could probably
bring in at most Rp 4 trillion.
"We do not have the exact figure yet, but revenue of between
Rp 3 to Rp 4 trillion would be realistic," he said, adding the
earnings would largely come from the planned sales of Bank
Mandiri, Bank Rakyat Indonesia (BRI) and the gas distribution
firm PGN.
Mahmuddin did not elaborate on the reasons for the
shortcomings. However, it is already apparent that the
privatization program has never run as smoothly as the government
hoped it would.
Internally, a lack of preparation and the rejection of offers
from various parties for state assets, often due to vested
interests, were primarily to blame for the slow progress of the
program.
This has further hampered the appetite for investment on the
part of investors already affected by the adverse investment
climate both at home and globally.
Consequently, the planned sales of a number of state-owned
companies have had to be canceled and delayed. The failed sale of
PT Semen Gresik, the country's largest cement producer, is a
prominent example that falls into the first category.
Other delayed sales that are included in the second grouping
are -- among others -- state owned pharmaceutical firms PT
Indofarma, PT Kimia Farma, and airport operators PT Angkasa Pura
I and PT Angkasa Pura II.
The government planned to use the revenue generated under the
privatization program to help plug this year's budget deficit,
projected at Rp 34 trillion.
A delay or a slowdown in the program will cause problems for
the state budget in danger, as it means that the government will
have to look for other sources of revenue to make up the loss.
It will also affect investor confidence in the government's
commitment to make real economic reforms.
The purpose of privatization is not only to raise cash for the
budget but also to restructure the country's strategic industries
so they can perform more efficiently and compete better with
international firms.
Other candidates for the government privatization program for
this year include PT Indofarma, PT Angkasa Pura I, PT Angkasa
Pura II, PT Danareksa (investment bank), PT Adhi Karya
(consultancy firm) and PT Pembangunan Perumahan (property
developer).