IRF fails to attract investors

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.