Privatization suggested to lure capital inflow

Privatization suggested to lure capital inflow

JAKARTA (JP): An economist suggested yesterday that the
government accelerate the privatization of state companies to
bring more capital into the country and reinvigorate the economy.

Christianto Wibisono, head of the Indonesian Business Data
Center, told journalists yesterday that Indonesia can no longer
rely on soft loans from international financial institutions,
such as the World Bank and the International Monetary Institute
(IMF), because they will focus on least developed countries.

He noted that a good alternative to getting capital inflow is
listing qualified companies on the major world stock markets,
which control some US$3 trillion.

"This amount of money is not at all controlled by the world
Bank and IMF," Christianto said.

Citing an example of PT Indosat, which will list 25 percent of
its shares on the New York Stock Exchange next week, Christianto
said other state companies are likely to go international.

They are, among others, domestic telecommunications company PT
Telkom, electricity company PT PLN, railway company Perumka,
seaport operator PT Pelabuhan Indonesia and toll-road operator PT
Jasa Marga.

A number of private companies have already gone international,
such as the Salim Group in Luxembourg, PT Gadjah Tunggal in
Singapore and PT Tri Polyta on the Nasdaq stock exchange in New
York.

Christianto said other developing countries, such as
Argentina, Chile, China and Thailand, have effectively used stock
markets as potential sources of foreign exchange.

Last year, total trading volume on major international stock
markets was recorded at 6.3 billion shares with a total value of
$200.7 billion.

Investment

Christianto noted that privatization is also a potential means
to attract foreign investment. Through its privatization program,
Indonesia has collected Rp 66 trillion ($30.5 billion) worth of
private investments for 69 projects, whose construction will be
completed within the coming three to 10 years.

The largest portion of investments is in the energy and
electricity sectors with $20.3 billion, followed by land
transportation, such as building toll roads and bus terminals
with $7 billion, sea transportation at $1.7 billion,
telecommunications at $1.2 billion and air transportation at $769
million.

Of the 69 projects, the largest is a coal-fired power plant in
South Sumatra, co-sponsored by Malaysian Sikap Ipp Transystem,
Bukit Asam Power and Bukaka with an investment of $7.5 billion.
The second largest are two refineries in East Java by PT Buana
Ganda Perkasa with $3.5 billion, followed by the Manggarai
integrated terminal in Jakarta, sponsored by a consortium of PT
Citra Lamtoro Gung, Bandar and Bukaka with a total investment of
$3.2 billion, and the Jakarta Mass Rapid Transport system to be
constructed at a cost of $3 billion.

The large energy projects include a 1,200 megawatt coal-fired
power plant in Paiton, East Java (being built by PT Paiton Energy
Company with an investment of $2.6 billion), another 1,200
megawatt power in Paiton (by a consortium of Bimantara Bayu Nusa,
Siemens and British Power Gen with $2.1 billion) and a 1,300
megawatt gas-fueled power plant in Tanjung Jati (by PT Cepa
Indonesia with $2 billion).(rid)