Govt to sell three more SOEs

The Jakarta Post, Jakarta

Less than four months away from year-end, the government remains confident it will be able to meet its privatization target for this year, betting on successful sales of stakes in three large state-owned companies.

Mahmudin Yasin, a deputy to the state minister for state enterprises, said on Wednesday the government expected to rake in some Rp 3.7 trillion from the planned sales of stakes in Bank Rakyat Indonesia (BRI), gas distributor Perusahaan Gas Negara (PGN) and cement maker Indocement Tunggal Prakasa.

The government aims to receive a total of Rp 6.1 trillion from the privatization program this year; thus far, it has collected about Rp 2.5 trillion, which has come entirely from the sale of a 20 percent stake in Bank Mandiri through an initial public offering (IPO).

The sale of stakes in BRI and PGN is expected to generate Rp 1.5 trillion in proceeds from each, while the sale of a 17 percent stake in Indocement is expected to bring in another Rp 700 billion.

The government has been relying heavily on proceeds from the privatization program for years to help plug the state budget deficit, despite the fact that the program has often sparked strong criticism from many politicians.

The government argues that aside from providing contributions to the state budget, the privatization program will allow state- owned enterprises, most of which are notorious for their corrupt culture, to perform better, to international corporate standards.

However, owing to a combination of stiff public opposition and a lack of preparation by the government, progress on the program has thus far remained slow.

This is evident from the government's recent decision to revise downward the proceeds target from the program from Rp 8 trillion to Rp 6.1 trillion.

According to Minister of Finance Boediono, the government has no choice but to scale down the target, following its failure to sell three other state companies that had been slated for sale this year.

They are: pharmaceutical companies Kimia Farma and Indo Farma and airport operator Angkasa Pura II, which runs the country's largest airport, Soekarno-Hatta International.

In 2004, the government hopes to raise Rp 10 trillion from selling state-owned enterprises, as stated in its draft 2004 state budget.