Govt set to sell 20% stake in Mandiri

Dadan Wijaksana, The Jakarta Post, Jakarta

The government hopes to sell 20 percent of the shares in giant state-owned Bank Mandiri this year through a private placement, according to a senior official.

Deputy at the Office of the State Minister of State Enterprises Mahmuddin Yasin said on Monday that the ministry would soon seek approval from the House of Representatives.

The House previously allowed the government to sell a 30 percent share in Bank Mandiri. The government last year sold a 20 percent stake through an initial public offering (IPO), meaning that the government can still sell a further 10 percent.

"The House has already agreed to sell the 10 percent stake in the bank, now we're trying to get the approval for another 10 percent," Mahmuddin told reporters.

He said that the government wanted to sell more shares in a bid to raise more money.

The government is hoping to pull in around Rp 5 trillion in privatization proceeds this year. It remains unclear however, whether the privatization proceeds target will be revised upward because of the change in the sale of the Bank Mandiri shares.

The government is relying on proceeds from the privatization to help cover the state budget deficit, which is Rp 24.4 trillion, or 1.2 percent of the country's gross domestic products (GDP).

However, Mahmuddin reiterated that his office remained committed to the completion of all the 2004 privatization programs within the first semesters of this year, in order to avoid distractions arising from the general elections -- during which investors are expected to take a wait-and-see stance.

The government has said it planned to sell shares in 14 state- owned companies this year.

Bank Mandiri was formed in 1998 through a merger of four state owned banks; Bank Ekspor Impor Indonesia (Bank Exim), Bank Dagang Negara (BDN), Bank Bumi Daya (BBD) and Bank Pembangunan Indonesia (Bapindo).

It now boasts staggering assets of Rp 251 trillion, and it is the largest lender in the country.

In 2003, the government managed to raise Rp 7.4 trillion in privatization proceeds, surpassing the initial target of Rp 6.2 trillion.

The proceeds mostly came from the sales of stakes in four state companies; Mandiri (20 percent), Bank Rakyat Indonesia (40.5 percent), cement maker Indocement (16.9 percent) and natural gas distribution company Perusahaan Gas Negara (39 percent).