Privatization of PT Pupuk Kaltim

Privatization of PT Pupuk Kaltim

The Director General of State Owned Enterprises (SOEs) stated
that, to support the privatization of PT Pupuk Kaltim, in the
near future the government would divest this company from PT
Pusri. He also said, the privatization of 16 SOEs this year would
be conducted through initial public offerings (IPO).

According to the plan, the IPO of PT Pupuk Kaltim is expected
to raise funds of Rp 1.8 trillion, most of which would be
transferred to the State Budget for 2001.

For the present, amid the economic turbulence, any efforts
which contribute to the realization of the 2001 State Budget
should be supported and in this case the role of the Director
General of SOEs is crucial for the success of PT Pupuk Kaltim to
achieve the Rp 1.8 trillion, primarily by making every endeavor
to accelerate the divestment prior to PT Pupuk Kaltim obtaining a
stock exchange listing which is scheduled to be carried out in
April of this year. Otherwise it could harm the intrinsic value
of PT Pupuk Kaltim's shares on the stock exchange.

The acceleration of the divestment prior to the listing would
increase the market price of Pupuk Kaltim's shares on the stock
exchange because, based on the consideration of efficiency,
practicability and flexibility, investors certainly would prefer
a full SOE to a subsidiary.

By being restored to their respective original legal status,
each of the fertilizer SOEs could enter into fair competition and
have an opportunity to freely enhance their performance.

Furthermore, the government through the Director General of
SOEs could appraise the ability of each board of directors of the
existing fertilizer companies in operating its respective
company.

In the era of open competition, the quality of leadership and
capability of an executive is decisive for the success of an
enterprise and that is why the system of reward and punishment
should be applied by the government to stimulate all the
management of the existing fertilizer companies to yield greater
profits.

HASAN BASRI MUCHTAR

Jakarta