Govt to sell 30% BNI stake: Official

Rendi A. Witular and Urip Hudiono, Jakarta

The government has decided to sell a maximum 30 percent stake -- not 51 percent as previously announced -- in publicly listed Bank Negara Indonesia (BNI) in the second half of this year, according to a senior official.

"We will sell only up to 30 percent of BNI shares. We have canceled our plan to sell a majority stake," Mahmuddin Yasin, deputy for privatization at the office of the State Minister of State Enterprises, told the House of Representatives Commission IX on finance on Tuesday during a hearing.

The government had earlier planned to sell a 51 percent stake in the country's second largest bank to a strategic investor in an effort to raise cash for the state budget and boost corporate governance in the state-controlled bank. The plan had been protested by many parties, including lawmakers, on fears that the bank would fall into the hands of foreigners, which could subsequently affect monetary authorities' capacity to formulate and execute policies and provide credit.

Mahmuddin said the government was awaiting the completion of BNI's ongoing massive restructuring to restore its image following the disclosure of a huge lending fraud.

Elsewhere, BNI vice president director Arwin Rasyid said the bank was ready to issue subordinated bonds of up to US$300 million in June to strengthen capital and to finance credit expansion.

"We expect to sell the bonds in June this year after road shows in Singapore, Hong Kong, London and New York at the end of May," said Arwin after attending a seminar on Tuesday held by global financial advisor Morgan Stanley.

Arwin said the bonds were expected to carry a 10-year maturity profile.

The sale of BNI shares is included in the government's 2004 privatization program, which is to raise Rp 5 trillion in cash to help finance the state budget.

Mahmuddin also said the government would sell a 10 percent stake in Bank Mandiri, the country's largest bank, in the second half of the year to take advantage of the positive sentiment in the stock market.

Earlier this year, the government sold a 20 percent stake in Mandiri via an initial public offering, which garnered a strong response.

Mahmuddin said other state-owned enterprises to be sold this year included a 30 percent stake in plantation firm PT Perkebunan Nusantara III and 14 percent each in mining company PT Aneka Tambang and tin miner PT Timah.

He was optimistic that this year's privatization target would be met, as the government had already raised around Rp 3.2 trillion in the first quarter.

Meanwhile, Muhammad Syahrial, president of PT Perusahaan Pengelola Aset (PPA), a government agency assigned to manage and sell assets transferred from troubled banks, said the government might sell greater shares in publicly listed Bank Permata to strategic investors in a bid to obtain premium price.

Syahrial said selling up to an 88.3 percent stake in Permata was one of the three options being considered.

The other two options are to sell a 51 percent stake to a strategic investor and 20 percent to public investors, or to sell the entire 71 percent stake to a strategic investor.

The government owns 91.3 percent of Permata.

The sale is expected to take place in September or October after receiving House approval.