Govt to sell state telecoms in September

Govt to sell state telecoms in September

JAKARTA (JP): The government said it expected to sell a state-
owned telecommunications company -- either PT Telkom or PT
Indosat -- in September to raise cash to help finance the 2001
state budget deficit.

State Minister for State Enterprises Laksamana Sukardi said on
Thursday that the government planned to sell 10 percent to 14
percent shares in either Telkom or Indosat, both publicly listed
companies.

He said that the government had prioritized the sale of
"technology driven" companies because of the rapidness of change
in technology.

"Technology could quickly become obsolete. Especially in the
telecommunications sector, we have to constantly keep up, buy,
and implement new technologies or our assets would become
obsolete," he told reporters after President Megawati
Soekarnoputri's address to the House of Representatives.

The government currently controls 66.19 percent in Telkom and
65 percent in Indosat. The remaining shares are held by the
public.

Laksamana said that the government should quickly divest its
shares in the telecommunications sector and let private investors
take over to increase the companies' competitiveness.

Private investors would be able to better prepare
telecommunications companies for competition in the era of ASEAN
Free Trade Area (AFTA) in 2002 and the World Trade Organization
(WTO) trade liberalization, he explained.

"Otherwise they (foreign companies) will enter Indonesia and
we'll be screwed," Laksamana added.

Asked which company would be put up for sale first, the new
state minister said that it depended on which was the stronger
and had the highest value.

He asserted that the government had no scruples about
divesting a majority of its shares in the telecoms companies, as
long as it would increase their benefit to the country.

"We are emphasizing on benefit rather than ownership. It
doesn't matter if ownership is at a minimum as long as we get
abundant benefit from it," Laksamana said, adding that it would
be for the benefit of the people.

The government has targeted to raise some Rp 6.5 trillion
(US$747 million) in privatization proceeds to help finance this
year's state budget deficit which is capped at 3.7 percent of
gross domestic product (GDP).

The government had issued a list of 16 state enterprises for
sale this year, but so far only pharmaceutical companies PT
Indofarma and PT Kimia Farma have been sold through initial
public offering. However, the proceeds from the sale did not go
to the government's coffers as they were used to finance the
companies expenses including an expansion program.

Experts have said that the slow progress in the country's
privatization program was mainly due to the political instability
and economic woes at home.

Some also said that nationalistic sentiments among legislators
had also created jitters among would-be foreign investors.(tnt)