Privatization amounts to zero so far: Govt

JAKARTA (JP): With four months remaining to help fill the country's widening state budget deficit, the government admitted on Monday that proceeds from its privatization program have so far amounted to zero.

Director general for state enterprises I Nyoman Tjager, however, claimed his office would still be able to achieve the full privatization target of Rp 6.5 trillion (about US$680 million) in four months time.

"The government will run its privatization program to reap a budget revenue of Rp 6.5 trillion, as stated under the Letter of Intent (LoI) with the International Monetary Fund (IMF)," Nyoman announced during a media briefing.

His optimism came despite the lingering reluctance of foreign investors in Indonesia and a sluggish global economy curbing investment growth.

So far, the government has sold, via the stock market, the pharmaceutical firms, PT Indofarma and PT Kimia Farma.

But their proceeds, Rp 100 billion for Indofarma and Rp 150 billion for Kimia Farma, were not intended for the government, Nyoman said.

"We were just testing the market at that time," he explained.

The sale of Indofarma and Kimia Farma received a poor response from the market, amid domestic political instability at the time, analysts said.

The two companies were among 16 state firms earmarked for privatization this year.

The Rp 6.5 trillion in privatization proceeds are expected to help contain the state budget deficit at 3.7 percent of gross domestic product (GDP).

But given the short time left, the government may repeat last year's poor privatization proceeds, which amounted to zero from the targeted Rp 6.5 trillion.

Back then, the government blamed the result on the adverse investment climate due to political instability. For this year, Nyoman cited similar reasons.

Analysts said foreign investors remain wary over the country's political outlook although Megawati Soekarnoputri's presidency brought some certainty.

Monday's progress report on the privatization program has been one of six preconditional steps the government must meet prior to the signing of a new LoI with the IMF.

Among the state firms earmarked for sale are property firm PT Wisma Nusantara, surveyor company PT Sucofindo, plantation firm PTPN III, retailer PT Sarinah, oil plantation firm PT Socfindo, coalmining company PT Tambang Batubara Bukit Asam, steelmaker PT Krakatau Steel, Bank Mandiri.

They belong to what the government called its most attractive assets ready for sale.

Nyoman also said he hoped to sell off a 10 percent to 14 percent stake in the publicly listed telecommunication firm PT Telkom sometime this year. He did not gave a definite timetable.(bkm)