PPA hopes to see more investors bid for Permata stake

PPA hopes to see more investors bid for Permata stake

The Jakarta Post, Jakarta

The government hopes that more investors will submit bids for a
20 percent stake in Bank Permata later this year so as to ensure
a favorable price.

Raden Pardede, vice president of the Ministry of Finance's
asset management company, the PPA, said recently that although
Standard Chartered Bank had openly expressed strong interest in
the 20 percent stake, the PPA still hoped that other investors
would become involved.

"The more bidders the better. We want to see more competition
so as to enable to us to obtain a higher price for the stake,"
Raden told reporters recently.

A consortium of StanChart and PT Astra International recently
won a 51 percent stake in Permata, the country's seventh largest
bank by assets, for Rp 2.77 trillion. The British bank, which
obtains a third of its profit from its Asian operations, has
openly said that it wants to purchase more shares in Permata.

The government plans to sell another 20 percent stake in
Permata in a bid to raise cash to help finance the 2004 budget
deficit.

In addition to the Permata shares, the government will also
sell its remaining minority shareholdings in a number of publicly
listed banks this year as privatization proceeds look likely to
fall below target.

The government currently holds 5 percent of the shares in Bank
Central Asia (BCA), 20.8 percent in Bank Internasional Indonesia
(BII), and 21.5 percent in Bank Niaga. The state obtained stakes
in these private banks after bailing them out in the wake of the
late 1990s financial crisis.

Earlier this month, the government sold a 10 percent stake in
Bank Danamon for Rp 1.74 trillion.

The government has set itself a deficit target of Rp 26.6
trillion (US$2.9 billion), or 1.3 percent of gross domestic
product, for this year. This deficit is supposed to be financed
by proceeds from the privatization of state enterprises, the sale
of government assets (primarily shares in a number of publicly
listed banks) controlled by the PPA, and foreign loans.

But State Minister for State Enterprises Sugiharto said on
Friday that the government would not be able to meet the Rp 5
trillion (US$550 million) privatization proceeds target. So far
it had only managed to raise Rp 3.4 trillion from the
privatization program. With only a couple of months before the
fiscal year ends, it would be impossible for the government to
continue the privatization program particularly with the ongoing
internal conflict in the House of Representatives. The
government would need to obtain the House's approval for the sale
of stakes in state enterprises.

The government hopes to be able to earn a total of Rp 12.9
trillion in cash from the sale of assets vested in the PPA this
year. This figure is more than double the initial target of Rp 5
trillion.