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).