Labor unions od state firms support privatization

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.