Labor unions od state firms support privatization

Moch. N. Kurniawan, The Jakarta Post, Jakarta

The Federation of State-Owned Enterprise Labor Unions (FSP- BUMN) said it would support the government's crucial privatization program, as long as it was carried out in a transparent way.

Some 15 representatives of FSP-BUMN met on Tuesday with State Minister of State Enterprises Laksamana Sukardi at the latter's office.

The federation groups labor unions from 120 state-owned enterprises (SOEs). Participants in the meeting included union officials from state-owned cement maker PT Semen Gresik and international telecommunications firm PT Indosat.

Government plans to privatize the two above firms had previously been opposed by their respective labor unions.

The unions also demanded a role in the drafting of the privatization bill.

"I'm satisfied with the meeting. Minister Laksamana promised to be transparent in the privatization program and include us in formulating the privatization law," head of FSP-BUMN Bambang S. Syukur told a media conference.

Members of FSP-BUMN staged an antiprivatization protest in mid-April, as they feared the privatization program would only inflict losses on the country, including massive layoffs.

"The government will continue the privatization program. What they (workers unions) want is transparency in the process," said Ferdinand Nainggolan, a deputy at the Office of the State Minister of State Enterprises.

The government has planned to privatize some SOEs this year in a bid to raise around Rp 6.5 trillion in cash to help reduce the 2002 state budget deficit, estimated at around 2.5 percent of gross domestic product.

But so far, proceeds from the privatization program have yielded nothing.

The government failed to meet the 2000 and 2001 privatization targets for a variety of reasons, including protests from local politicians and workers, who feared that privatization could lead to mass layoffs.

One prominent case occurred when the government had to abandon late last year a plan to sell a controlling stake in Semen Gresik to Mexico's Cemex SA de CV, the world's third-largest cement maker, partly due to protests from Gresik's fully-owned subsidiaries in West Sumatra and South Sulawesi.

But Laksamana is determined to complete the sale of Semen Gresik this year.

He has ordered the Semen Gresik president to reshuffle the top management of the West Sumatra-based PT Semen Padang and South Sulawesi-based PT Semen Tonasa.

The government is also planning to sell shares in publicly- listed Indosat this year. It expects to sell a 15 percent stake sometime in June, and another 30 percent in October.

Indosat is currently in negotiation with Germany's Deutsche Telekom to acquire the latter's 25 percent stake in the country's second-largest cellular operator, PT Satelindo. The acquisition move is expected to increase the value of Indosat prior to its second-round privatization.

The recent success in the sale of the government's 51 percent stake in Bank Central Asia, the country's largest retail bank, should serve as a catalyst for the privatization program.

There has been suspicion, however, that opposition to the privatization program was being orchestrated by SOE top management and politicians, who had been treating the SOEs as cash cows.

Laksamana has repeatedly said that in addition to the cash benefit to the state budget, the privatization program would help boost transparency at SOEs and eradicate corruption.

The entry of foreign investors, will, for example, improve corporate governance within the SOEs.