Govt to boost privatization program

Govt to boost privatization program

JAKARTA (JP): The government is preparing a new agenda to
boost the privatization program of the country's state
enterprises, a senior official said.

State Minister for the Empowerment of State Enterprises Tanri
Abeng said Saturday that boosting the privatization program was
now necessary to raise fresh funds to assist the country's ailing
economy.

He said proceeds from privatizations, conducted either by
selling state company shares to the public or through sale of
their assets, would be used to help finance the 1998/1999 state
budget, which has allocated massive funds to subsidize domestic
sales of fuel and staple commodities as such rice.

Indonesian economic ministers, including finance minister Fuad
Bawazier and Tanri, met with IMF Asia-Pacific director Hubert
Neiss over the weekend to review the country's privatization
program, which is part of the reform program Indonesia agreed
with the IMF in January in exchange for a US$43 billion bailout
fund.

The officials declined to provide detailed information about
the meeting, saying it would be premature to disclose the initial
results.

"We discussed privatization, but plans have still to be
finalized," Tanri told reporters, stressing that the two sides
had already come to a good understanding.

"They (the IMF) asked us to provide clear privatization
targets for 1998/1999," he said.

Indonesia has a total of 164 state-owned companies, 70 percent
of which were considered to be financially unhealthy as of last
year.

The forthcoming privatization program would be different from
past programs, Director General of State Enterprises Bacelius
Ruru said, but he declined to elaborate. "There are differences
in several areas," he said.

Fuad also said that part of the proceeds from the
privatization program would be used to support the government's
budget.

Together with the IMF, the government said recently it would
revise the 1998/1999 budget to accommodate new developments in
the crisis-hit economy, especially in relation to sources of
funding and subsidies.

The revision will be the second since the budget was unveiled
by President Soeharto in early January.

An IMF team has been in Jakarta for more than two weeks
reviewing Indonesia's reform program, which has been divided into
five groups covering monetary issues, banking reform, the budget
and subsidies, structural reform, and private sector overseas
debt.

Although the IMF has agreed to an Indonesian proposal to
continue subsidizing basic commodities, including fuel, concern
about the dangers of a huge budget deficit remain.

The government has indicated that it will continue to
subsidize the import of staple goods and medicines. Observers
have speculated that the import of such commodities will be
guaranteed at a special fixed exchange rate of Rp 6,000 to the
U.S. dollar.

The rupiah plunged to an all-time low of Rp 17,000 to the U.S.
dollar in January, down from the pre-crisis level of Rp 2,450 in
July. The currency has subsequently recovered some of its former
value and was trading at between Rp 8,500 and Rp 9,000 to the
dollar last week.

It has been estimated that at least US$1.5 billion will be
needed to import rice, other staple goods, medicines and hospital
equipment during the 1998/1999 fiscal year, which starts in
April.

The IMF has also lent its support to a government initiative
to provide a financing facility for small to medium-sized
business, which it considers to be a very important way of
generating new jobs.

Coordinating Minister for the Economy, Finance and Industry
Ginandjar Kartasasmita said yesterday that the government and the
IMF had concluded most of their discussions.

However, he said efforts to settle the country's private debt
problem had still to be finalized.

"Talks on the other four areas are mostly concluded, only some
details remain," he said. (08)