IRF fails to attract investors
Adianto P. Simamora, The Jakarta Post, Jakarta
The government's plan to establish the so-named Indonesian Recovery Fund (IRF) to help finance the revitalization of the country's industries remains uncertain as foreign investors have still been reluctant to invest in the fund.
"Frankly speaking, the plan to establish the fund is not progressing as well as I had expected. Foreign investors have yet to regain their confidence (in Indonesia)," Minister of Industry and Trade Rini M. Soewandi told reporters on Monday after presiding over the start of trading at the Jakarta Stock Exchange.
Factors that discouraged investors included the stalemate in the country's privatization program, she said.
"Many of them (investors) are still waiting for the government to form a clear policy on the privatization program," Rini said.
The investors are also awaiting the outcome of the sale of Bank Central Asia and are watching to see if the sale process will be carried out transparently, she said.
The bidding for BCA is now in progress, with British bank Standard Chartered Bank and American investment firm Farallon competing with each other.
The government plans to raise around Rp 6.5 trillion (about US$650 million) in privatization proceeds this year.
Last year, the government was unable to sell its stake in some state-owned companies, including cement producer PT Semen Gresik, due to strong opposition from various parties, including politicians and employees.
Last year, Rini announced plans to set up IRF to help the recovery of the country's industrial sector, which mostly remains in the doldrums due to indebtedness and economic crisis.
She mentioned again the funds in the ministry's blueprint program for the revitalization of the country's industries which had yet to be approved by the Cabinet.
In the revitalization program, Rini has placed priority on four industries -- textiles, electronics, footwear and pulp and paper -- given their labor-intensive nature.
The growth of the industries could lead to the creation of many jobs, while their collapse could lead to the laying off of thousands of workers, she said.
In the revitalization program, Rini suggested the establishment of IRF, which comprises IRF Asset Management and IRF Venture Capital.
IRF Asset Management is aimed to quickly restructure the debts of the four sectors.
Their debts should be transferred from the Indonesian Bank Restructuring Agency (IBRA) to IRF Asset Management, which will restructure the debts on commercial terms.
"Canadian firm Manulife has expressed serious interest in supporting the program," she said.
Meanwhile, IRF Venture Capital is aimed at providing capital for small and medium enterprises, which are active in supporting big industries.
Rini said earlier that the initial funding was expected to reach $200 million, of which the government might have to contribute $10 million.