House delays decision on BCA divestment

House delays decision on BCA divestment

JAKARTA (JP): The House of Representatives (DPR) delayed on
Monday the decision as to whether or not it would endorse a new
government plan to divest 51 percent shares in the publicly
listed Bank Central Asia (BCA), saying it needed more time to
study the proposal.

"Tomorrow (Tuesday) we will convene again to decide whether or
not to endorse the government plan to sell 51 percent of its
shares in BCA," head of House Commission IX on finance and state
budget Benny Pasaribu said during a consultation meeting with
Minister of Finance Boediono, State Minister for State-owned
Enterprises Laksamana Sukardi and Bank Indonesia Governor Sjahril
Sabirin.

The government had initially hoped that the meeting, called
upon Boediono's request, would lead to the approval of the
divestment plan, which is part of the government's latest
agreement with the International Monetary Fund (IMF).

However, some lawmakers, notably those from the United
Development faction, the Reform faction and the Crescent Star
faction, argued against "making a hasty decision", saying they
needed time to consult their leaders and study the planned
divestment.

DPR members have become increasingly critical of plans to sell
BCA shares after the government "unilaterally" agreed with the
IMF to sell a 51 percent stake in BCA, the country's largest
retail bank, in exchange for financial assistance from the IMF.

Legislators blocked the BCA sale program last year, prompting
the IMF to suspend its US$5 billion loan program in the country.

The government earlier this year obtained approval from the
legislators to only sell a 30 percent stake to a strategic
investor, but following a recent negotiation with the IMF, the
government announced the new sale plan.

Legislators against the divestment plan suspected foul play in
the move, pointing out that the IMF had earlier agreed to sell
only 30 percent of government shares in BCA.

Laksamana denied any foul play in the planned sale, saying the
move was merely taken "out of responsibility to bring the country
out of its current economic crisis."

"The planned divestment would hasten economic recovery,"
Laksamana said, adding that the decision was taken as a result of
discussions among economic ministers and not due to IMF pressure.

He also said that strategic partners would agree to purchase
BCA shares if they could have a controlling stake in the bank.

"Foreign strategic partners are willing to pay a premium of
between 25 percent and 35 percent above the market price,"
Laksamana said without mentioning any potential bidders.

Laksamana said the entry of foreign investors into BCA would
help restore confidence in the banking system and therefore
minimize the risk of bank closure in the future which would place
an additional burden on the guarantee fund.

"Moreover, the divestment plan stimulates foreign interest in
the privatization of other government assets," he said.

The government has pledged to the IMF to collect some Rp 27
trillion (US$3.07 billion) in cash from selling assets held by
the Indonesian Bank Restructuring Agency (IBRA) and Rp 6.5
trillion from privatization of state-owned enterprises.

Some lawmakers had also earlier expressed strong objections to
the new BCA sale plan, arguing that selling BCA shares at the
current price would bring no profit to the state's coffers.

While the consultation at the House was taking place, marked
by interruptions and debates on whether the meeting was a
consultation meeting or a working meeting, some students
protested outside the meeting room, slamming Minister Laksamana
for what they called a BCA sellout.

They carried pamphlets calling on the government to delay the
plan to sell BCA shares to strategic partners. "Stop the
divestment of BCA shares, go to hell IMF," some of the pamphlets
said. (tnt/03)