Labor union opposes Indosat sale plan

Debbie A. Lubis, The Jakarta Post, Jakarta

In another sign of what appears to be an emerging trend among labor unions in opposing the government's crucial privatization program, the labor union representing the workers of state-owned post and telecommunications firms (ISP Postel) urged the government on Monday to drop plans to sell a stake in the state- owned international call operator PT Indosat Tbk to foreign investors.

ISP Postel chairman Abu Syukur said that the 100,000-member union would launch a full-scale strike if the government proceeded with the sell-off plan.

"We are not speaking on behalf of ourselves but rather we do not want the government selling national assets to foreign companies ...," he said during a press conference.

The government, which currently holds a 65 percent stake in the publicly-listed Indosat, plans to sell a further 15 percent stake in the company in June to raise around Rp 1.7 trillion (about US$170 million).

The government is also due to sell another 30 percent stake in October to a strategic investor.

The divestments are part of the government's privatization program this year, which is aimed at raising a total of Rp 6.5 trillion to help finance the 2002 state budget deficit.

Earlier reports said that there were seven international telecommunications companies interested in buying a controlling stake in Indosat, including Australia's Telstra Corp., Vodafone Airtouch PLC, France Telecom's mobile unit Orange SA, Hutchison Whampoa Ltd., Telekom Malaysia Bhd., Singapore Telecommunications Ltd., and British Telecommunications PLC.

In addition to raising badly needed cash, completing the privatization program is also important for proving to both international creditors and investors that the government is strongly committed to implementing painful economic reform programs.

But the threat from ISP Postel may indicate growing opposition from labor unions to the government's privatization and asset sale program.

Last year, the government failed to sell a controlling stake in cementmaker PT Semen Gresik to Mexico's Cemex SA de CV due to strong opposition from various quarters, including company employees.

Last week, the government's plan to sell a 51 percent stake in Bank Central Asia (BCA), the country's largest retail bank, nearly collapsed following a massive protest by the bank's employees.

Although the government has named a consortium led by U.S. investment firm Farallon Capital as the new owner of BCA, thousands of workers fearing job losses are still considering staging further demonstrations.

Completing the BCA sale is crucial for the government's attempts to win the support of international creditors grouped in the Paris Club for the rescheduling of more than US$5 billion in the country's sovereign debt maturing in 2002 and 2003. The debt rescheduling is the key to ensuring the sustainability of the state budget.

The government has listed some 24 state-owned enterprises as candidates for the privatization program this year. It also plans to divest its stakes in several other nationalized banks.

Officials from the office of the State Minister for State Enterprises were not available for comment.

ISP Postel plans to pay a visit to the ministry on Thursday, bringing along some 10,000 members to express their opposition to the privatization program.

"We are white-collar workers. We will negotiate with the government first, but the union has around 100,000 members who are ready to support action if we fail to reach an agreement with the government," Abu said.

He also said that the country would suffer more losses if quality assets like Indosat were to come under the control of foreign investors.

Asset sales opposed by labor unions

(Company - stake for sale (%)): Semen Gresik - 51; BCA - 51; Indosat - 45