Govt to float seven state firms in 1998/99
Govt to float seven state firms in 1998/99
JAKARTA (JP): The government is planning to divest holdings in
five listed firms and float seven state-owned companies in the
1998/1999 fiscal year.
State Minister of the Empowerment of State Enterprises Tanri
Abeng said the government would initially invite strategic
investors into the state firms before floating them on stock
markets.
"Apart from the divestment in those five firms that are
already listed, there will also be a further seven state-owned
firms listed," Tanri told the media yesterday after a limited
cabinet meeting.
He said the private placement mechanism would be used to
invite strategic investors into the state firms.
"Usually, if we do this, the performance of those state firms
will improve and their share prices will be higher," he said at
his office at the National Development Planning Board building.
He said the government would receive a larger amount of
proceeds by floating better value companies.
State-owned companies would have better value because
strategic investors have superior technology and strong networks
in their respective fields.
He added that the government would only privatize profitable
companies to get a better deal, and their initial public
offerings (IPOs) would only be done during favorable market
sentiment.
Tanri declined to name companies which would be floated
because a thorough study of the candidates was still underway and
was expected to be completed before September.
He indicated the firms would come from the industrial,
plantation, toll road and port sectors.
Six state firms are listed on local stock exchanges. They are
domestic telecommunications firm Telkom and international
telecommunications operator Indosat, tin miner Tambang Timah,
gold and nickel miner Aneka Tambang, cement producer Semen Gresik
and Bank Negara Indonesia.
The first three companies are also listed on the New York and
London stock exchanges.
The government has said it would divest more of its ownership
in all the listed state companies except Aneka Tambang.
Tanri declined to provide the amount of proceeds expected from
the privatization program, but said the funds would be used to
help finance the huge budget deficit in the 1998/1999 fiscal
year.
The government announced yesterday that the current fiscal
year would have a deficit of 3.2 percent of gross domestic
product resulting from the provision of large subsidies, labor-
intensive employment creation, cheap credit for small scale
businesses and cooperatives.
Some estimate that the total subsidies in the fiscal year will
amount to Rp 27 trillion (US$3.17 billion).
"We must be able to help cover the budget deficit," Tanri
said.
The nation is currently facing its worst-ever economic crisis,
prompted by the sharp plunge in the rupiah, with detrimental
impacts including soaring domestic prices and widespread
unemployment.
The government has clinched a new deal with the International
Monetary Fund to handle the crisis, a plan which includes the
acceleration of the privatization program. (rei/prb)