IMF queries delay in BCA divestment

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)