Govt scales down privatization plans to six state firms

JAKARTA (JP): The government has decided to privatize six state firms rather than the 12 originally planned in this fiscal year due to bearish conditions on the local stock market.

Sofyan Djalil, an assistant to the State Minister of the Empowerment of State Enterprises, said here on Tuesday that the government would be unable to privatize 12 state firms on schedule due to bearish sentiment.

"We will only privatize six state firms in this fiscal year instead of 12 due to unfavorable market conditions," he told journalists after a talk show jointly organized by Harvest International and the state radio station Radio Republik Indonesia (RRI).

The six firms remaining on the list are cement maker PT Semen Gresik -- which has already been partially privatized -- international call operator PT Indosat, state mining firm PT Aneka Tambang, sea port operator PT Pelindo II, airport operator PT Angkasa Pura II and plantation firm PTP IV, he said.

The first three are listed on the local stock exchange while the latter three are not.

Sofyan said that the International Monetary Fund (IMF) had agreed to the scaled-down privatization plans.

"The government and the IMF have reached a fresh agreement on the privatization of state firms," he said.

The IMF made the sale of government stakes in state firms one of many conditions attached to the release of funds from a US$49 billion rescue package which it put together to save the Indonesian economy from collapse.

The government originally expected to raise $1.5 billion in this fiscal year through the sale of shares in 12 state firms.

Sofyan said the government would no longer be able to reach the $1.5 billion revenue target as a result of the change in plans.

"Since the number of state firms to be privatized has been cut, the amount of funds we can expect to raise through the privatization program will be lower than $1.5 billion," he said without giving a new target.

So far, only a government stake in Semen Gresik has been sold. Mexico's Cemex SA purchased a 14 percent stake in the company for US$114.6 million.

Cemex SA, which is the third largest cement manufacturer in the world, has also been given the right to purchase a further 11 percent stake in Semen Gresik through a tender offer mechanism in the local stock market.

The government next plans to arrange for the sale of a 14 percent stake in Indosat, Sofyan said.

He did not rule out the possibility of allowing foreign entities to acquire a controlling share in the company. "Yes, it's possible," he said.

In a bid to make Indosat more attractive, the government last month approved an increase in international call rates to help offset the weaker rupiah.

The rupiah has tumbled by 65 percent against the U.S. dollar to Rp 7,500 per dollar from a pre-crisis level of 2,450. The sharp depreciation made outgoing calls from Indonesia much cheaper in foreign currency terms.

Sofyan said the privatization of Indosat and the other four state firms was expected to be finalized in the first quarter of 1999.

"Hopefully, we will be able to complete privatization of the remaining five state firms by March," he said. (aly)