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)