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)