Govt scales down privatization plans to six state firms

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)