IMF queries delay in BCA divestment

JAKARTA (JP): A senior official of the International Monetary Fund (IMF) met with House of Representatives (DPR) Speaker Akbar Tandjung on Monday to stress the importance of the planned sale of Bank Central Asia (BCA) just several hours before the Fund's board of executives was due to convene in Washington to decide on the disbursement of a crucial loan to the country.

"They asked about the divestment plan of BCA which, according to them, is very important," Akbar told journalists following a meeting with IMF Asia Pacific director Yusuke Horiguchi.

Horiguchi declined to make any public comment.

The House has delayed taking a decision on the government plan to divest a 51 percent stake in the publicly listed BCA later this year.

House approval of the divestment plan is seen as a necessary condition for the IMF board to approve the disbursement of Indonesia's US$400 million loan tranche.

Last year the IMF suspended the loan disbursement after legislators blocked the government plan to sell BCA.

The IMF board of directors are expected to convene late Monday or early Tuesday Jakarta time to decide on whether to approve the country's new Letter of Intent (LoI), which includes the BCA divestment plan.

Support of the IMF board is crucial for the government to obtain a debt rescheduling facility on sovereign debt maturing this year with the Paris Club of creditor nations, which are also gathering in Paris on the same day.

The rescheduling facility is crucial to controlling a potential blowout in the 2001 state budget.

In an unusual move, the government only sent a low level mission to the Paris Club meeting. In the past, such meetings were lead by the coordinating minister for the economy.

Legislator Faisal Baasir, who accompanied Akbar in the meeting with Horiguchi, said that the IMF urged legislators to endorse the government's BCA sale plan.

"The government must divest 51 percent of its shares in BCA," Baasir quoted Horiguchi as saying during the meeting.

The House, however, decided to once again delay a scheduled session with the government on the BCA sale plan, arguing that Minister of Finance Boediono was still attending a gathering of the Asia Pacific Economic Cooperation (APEC) in China.

Head of the House's Commission IX on state budget and finance, Benny Pasaribu, said that a meeting regarding the BCA divestment plan would be held on Wednesday.

"Deliberation of the BCA divestment plan has been postponed until Wednesday because Minister of Finance Boediono is not here," Benny told The Jakarta Post.

The government currently controls 60 percent of BCA, the country's largest retail bank.

Reports have said that several leading international banks such as Citibank, ABN Amro, DBS Bank, and Standard Chartered Bank have expressed interest in BCA. None of the banks have confirmed the reports.

Separately, Horiguchi said after a meeting with Coordinating Minister for the Economy Dorodjatun Kuntjoro-Jakti that the planned sale of BCA would help increase share prices in the local capital market, which would be good for the overall economy.

"The market is waiting for BCA's divestment. If the divestment is conducted at a good level, the market will grow, the interest rate would go down and the country's economy will grow," he said.

Meanwhile, State Minister for State Enterprises Laksamana Sukardi said earlier that strategic investors were willing to pay a premium between 25 percent and 35 percent above the market price of BCA shares, provided they became a majority shareholder in the bank.

Laksamana also said earlier that the DPR should approve the BCA divestment plan in the next two weeks as it would be the best choice for the government and the country.

Golkar legislator Paskah Suzetta said on Monday that the DPR has no plan to block the government move to divest its shares in BCA, but added that the House had its own mechanism for dealing with such issues.

BCA was founded by the Salim Group, the country's biggest conglomerate prior to the 1997 economic crisis. The bank was taken over by the government in 1998.

There have been rumors that the Salim family is eager to repurchase the bank, although the government had said that Salim would not be allowed to reenter.(03/10)