Fri, 19 Mar 1999

Privatization of state firms may yield only $381m

JAKARTA (JP): Indonesia is likely to raise only about US$381 million from its privatization measures in the 1998/1999 fiscal year ending March 31, a senior government official has said.

The privatization proceeds will be less than half of the $1 billion target set by State Minister of the Empowerment of State Enterprises Tanri Abeng.

The official, who asked for anonymity, said on Wednesday that the government had so far only managed to privatize two state- owned companies, one of them seaport operator PT Pelindo II, raising $200 million.

"Tanri has completely failed. He hasn't done a good job," he told The Jakarta Post.

The source said the government also received some $59 million from its divestment of publicly listed instant noodlemaker PT Indofood Sukses Makmur, and $121 million from the sale of its stake in publicly listed cementmaker PT Semen Gresik.

Indofood is the world's largest instant noodlemaker controlled by the greatly diversified Salim Group. The government last year sold its 10.18 percent stake in the company.

The government also sold its 14 percent share in state-owned Semen Gresik last year to Mexico's cement giant Cemex SA.

The government named in February Grosbeak Pte Ltd, a unit of Hong Kong's Hutchison Whampoa, as the preferred bidder for a 49 percent to 51 percent stake in PT Jakarta International Container Terminal, a unit of Pelindo II. But the government has yet to announce the proceeds from the sale.

The source said he was skeptical over whether the privatization plan of international telecommunications company PT Indosat could be completed in the current fiscal year.

He did not elaborate.

According to a letter of intent sent to the International Monetary Fund which was released on Tuesday, further divestment of Indosat shares will have to be postponed by one to two months due to regulation obstacles. This means privatization will occur in the 1999/2000 fiscal year.

However, Tanri's assistant Herwidayatmo is convinced that the Indosat sale will be completed this fiscal year.

"We are going to complete the Indosat sale this month," he told the Post.

Initial plan

Tanri initially planned to raise $1.5 billion in the current fiscal year through the privatization of 12 state-owned companies. But he latter slashed the target to $1 billion, mostly due to bearish market sentiment.

The privatization proceeds are expected to help finance the 1998/1999 state budget, which faces a huge deficit due to spendings on measures to survive the economic crisis.

In addition to Indosat, the government planned to divest of shares in mining companies and privatize a plantation company and airport management firm.

The government plans to raise $1.5 billion in the 1999/2000 fiscal year through the sale of 10 state-owned companies. The priorities of the privatization target will be given to companies the government initially planned to sell in the current fiscal year.

Tanri said early this year that the companies would include tin mining company PT Tambang Timah, coal mining firm PT Tambang Batubara Bukit Asam, domestic telecommunications provider PT Telkom, toll road operator PT Jasa Marga, steelmaker PT Krakatau Steel and seaport operator PT Pelindo I. (rei)