House sets terms for approval of BCA and Bank Niaga sale
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)