House sets terms for approval of BCA and Bank Niaga sale

JAKARTA (JP): The House of Representatives will approve the government's plan to divest its ownership in publicly listed Bank Central Asia (BCA) and Bank Niaga in the first semester of this year if the government can meet "certain conditions", according to legislator Paskah Suzetta.

Paskah said late on Tuesday that the government must be able to ensure legislators that the timing of the sale was appropriate, and that the sale must be conducted via an open tender process.

"We may approve the plan to divest the 36 percent (government) shares in BCA ... as long as the conditions are met," he told reporters following a closed-door meeting between the House special team and top officials of the Indonesian Bank Restructuring Agency (IBRA).

"We also approve the sale plan of Bank Niaga with the same conditions," he added.

"But this (approval) has nothing to do with pressure from the International Monetary Fund. The people have no commitment to the IMF, the commitment was pledged by the government," he said.

He said that IBRA would meet again with the special team in two weeks to discuss the "numbers and calculations" proposed by the agency.

House Commission IX for the state budget and finance earlier in the day failed to approve the sale plans after some legislators opposed it. The commission then decided to form the special team.

The government is under strong pressure from the IMF to immediately complete the divestment of government majority shares in BCA and Bank Niaga this year after it canceled the sale late last year.

The IMF has also delayed the disbursement of its next US$400 million tranche to Indonesia partly due to the slow progress in the sale of BCA and Bank Niaga. The IMF is providing a some $5 billion loan to Indonesia. So far it has disbursed around $1 billion.

The government has said that it plans to sell its shares in the two banks in the first semester of this year.

The government nationalized BCA and Bank Niaga after the banks were badly hit by country's financial crisis.

The government sold a 22.5 percent stake in BCA last year through an initial public offering.

Meanwhile, finance minister Prijadi Praptosuhardjo said on Tuesday at a meeting with Commission IX that the government had already committed to the IMF to divest its stake in BCA and Bank Niaga in the first half of this year, and that another delay would seriously hurt investor confidence here.

"Investors keep asking about the sale plan, they want assurances ... It's the credibility of the government at stake here," Prijadi said.

He added that the delay in the sale plan would not only hurt relations with the IMF but also with other major donor institutions and donor countries.

The minister acknowledged that the current market condition might not be favorable for the sale of the banks, but "the government has already made a commitment".

Prijadi also said that the government would not allow the Salim Group, the founder of BCA, to buy back its shares.

Paskah said that the legislative special team would not approve the sale of BCA to be conducted through the stock market because the Salim Group could then repurchase its shares in the bank.

Paskah also said that the plan to sell the government's 36 percent stake in BCA was expected to raise some Rp 7.5 trillion in proceeds.

He said that the size of the sale of government shares in Bank Niaga had not yet been decided.

"The government may divest all of its share in Bank Niaga," he said.(rei)