Govt to sell minority shares in banks soon

The Jakarta Post, Jakarta

The new government will soon sell its minority shares in a number of banks in a bid to help plug the 2004 state budget deficit, according to Minister of Finance Yusuf Anwar.

Yusuf explained that the sale of government assets managed by the Ministry of Finance's asset management company PT Perusahaan Pengelola Aset (PPA) was seen as the quickest way to raise cash, while the alternative option of privatizing state-owned enterprises would take more time and was politically more sensitive and required the approval of the House of Representatives.

"Proceeds from PPA asset sales are the most feasible and efficient ways to help plug the state budget deficit, as opposed to privatization (of state enterprises), which is not easy and full of political issues," said Jusuf on Saturday.

"There is always a possibility for the government to sell its minority stake in banks in the immediate future," he said.

The government, via the PPA, holds minority shares in a number of banks including a 20.78 percent stake in Bank Internasional Indonesia, 5.04 percent in Bank Central Asia, 20.50 percent in Bank Danamon and 21.51 percent in Bank Niaga.

Yusuf did not provide details about the divestment plan nor did he say how much extra money the PPA had to raise.

The PPA has been targeted to provide Rp 2.8 trillion (US$311 million) in cash this year for the government.

PPA president director Mohammad Syahrial has previously said the company was likely to meet this year's initial proceeds target from the divestment of a 71 percent government stake in Bank Permata to strategic investors (51 percent) and to the public (20 percent).

The PPA recently wrapped up the strategic sale of a 51 percent stake in Permata to a consortium consisting of UK-based Standard Chartered and local automotive giant PT Astra International.

From the sale, the PPA is expected to bring in Rp 2.77 trillion in proceeds on Nov. 11.

The company is preparing to sell another 20 percent stake to the public within the next two months.

Aside from the proceeds, the PPA is expected to obtain dividends from a number of banks estimated at about Rp 210 billion.

The government is under pressure to raise more money this year due to higher than projected spending on fuel subsidies amid the current surge in world oil prices. The 2004 state budget deficit is estimated at Rp 24.41 trillion.