Indosat's overseas listing will promote Indonesian profile

JAKARTA (JP): The planned listing of the state-owned PT Indosat will not only help the Indonesian government raise funds, but will also place the country on the world's financial map, an executive of a leading international underwriting firm said.

Peter Clarke, chairman of Merrill Lynch Limited for the Asia- Pacific Region, said here yesterday that the spotlight gained by Indosat from its offshore listing will indirectly bring the eyes of the world to Indonesia.

"This will put Indonesia right in the hands of leading investors," he said, adding that the exposure for Indonesia will attract more foreign investors to tap the country's economic potential.

He said Chile, Argentina, Brazil and China have become more popular among leading investors since some of their companies listed on the New York Stock Exchange.

"The Indonesian privatization program will raise the profile of Indonesia on international markets, and thus allow the private sector to capitalize on its success," he told business executives at a seminar on strategic financial alternatives.

Speakers at the seminar, which was officially opened by Minister of Finance Mar'ie Muhammad, included Central Bank Governor J. Soedradjad Djiwandono; Winarto Soemarto, the president of the state-owned Bank Negara Indonesia (BNI); Rini M.S. Soewandi, the financial director of Astra International, and Rizal Ramli, the managing director of the Econit business consulting company.

Clarke, however, warned that the government should be very selective in choosing the first state company to "go international."

Reputation

If the listing of the first company is not successful, the country's economic reputation will be damaged, he said.

The first company to go international must be of high quality in order to set a good precedent for future transactions, he said, adding that Indosat, the company providing international telecommunication services, and PT Telkom, the domestic telecommunication service company, will help achieve the objectives as they will benefit from the strong demand for international telecommunication stocks.

Merrill Lynch is one of 10 international underwriting companies which are now competing to become the lead underwriter of Indosat, which will float 35 percent of its shares on the New York Stock Exchange in November.

Other state-owned companies, including the national flag carrier Garuda Indonesia, the state oil firm, Pertamina, Telkom and subsidiaries of the State Electricity Company (PLN).

Touching on the development of the country's capital market, Clarke said that most investors perceive Indonesia as "value- oriented" market, particularly in comparison to other Southeast Asian markets.

"Merrill Lynch maintained a positive rating on the market and recommends overweight asset allocation," he said, adding that his company's confidence is based on the promising Indonesian economy.

The real growth of the country's economy is expected to reach seven and eight percent in 1994 and 1995, respectively, while inflation is expected to fall to seven or eight percent from over nine percent in each of the last two years, he said.

Clarke said the country's buoyant economic prospects will have a positive impact on the local capital market and will also incite a positive response from the world's investors to the partial privatization of state-owned companies on international markets. (hen)