Privatization to 'go on despite sluggish market'

Privatization to 'go on despite sluggish market'

JAKARTA (JP): The government will continue with its
privatization program despite the present sluggish market, a
senior government official said on Friday.

Deputy to State Minister of Investment and State Enterprises
Development I Nyoman Tjager said the privatization of 10 state
firms would proceed as scheduled.

"We have to move on, there will be no delay," Nyoman
announced, following a meeting with the House of Representatives
Commission V for industry and trade affairs.

He was responding to growing concerns that privatization would
fail to meet the revenue target, as the market had deteriorated
due to prevailing political uncertainties.

The government expects to raise some Rp 6.5 trillion (US$764
million) from the privatization of 10 state firms during the
April-December 2000 fiscal year.

But in the past two months, the Jakarta Stock Exchange's index
has dropped to an average of 450 from over 500.

"The market can't be bad all the time, we hope it will soon
improve," he said.

Nyoman said House Commission IX for financial and development
planning affairs was consulted over the privatization schedule.

"Actually, the target of Rp 6.5 trillion was theirs," he said.

The government had expected to meet the target through sales
of only eight firms: general mining company PT Aneka Tambang,
airport operator PT Angkasa Pura II, coal mining company PT Bukit
Asam, plantation companies PT Perkebunan Nusantara III and IV,
fertilizer producer PT Pupuk Kaltim and pharmaceutical
manufacturers PT Indo Farma and PT Kimia Farma.

However, early this month it added surveyor firm PT Sucofindo
and trading company PT Kerta Niaga to the list.

Nyoman said the additional two companies would make up only a
minor percentage of the overall proceeds from the privatization
of 10 companies.

He said the government only sought to increase the stakes of
foreign surveyor firm Societe Generale De Surveillance (SGS) in
PT Sucofindo from the current 5 percent.

"With globalization now at the forefront, the sales will boost
SGS's commitment to Indonesia," he said without disclosing how
much of Sucofindo's shares the government planned to sell.

As for Kerta Niaga, he said, the government would liquidate
the company.

Nyoman said his office expected little from the sales of Kerta
Niaga's assets. "There might be nothing left after we pay for
employees' compensation," he said.

If proceeds from the sales of the 10 companies' shares do not
come close to the target, the government will sell shares in
other state companies, Nyoman said, adding the government had
identified nine other state companies for a standby privatization
program.

The nine companies include telecommunications firms PT Telkom
and PT Indosat and mining company PT Tambang Timah.

Nyoman said an interministerial team was preparing a detailed
action plan on the restructuring and privatization of Telkom and
Indosat.

However, analysts have said the slow reforms in the country's
telecommunications sector would hamper efforts to sell stakes at
both companies this year.

"If time is the issue then we'll just have to work faster," he
said.

Commission V voiced opposition on Monday to the planned
privatization of state plantations companies, saying the
companies were too vital to be controlled by the private sector.

Nyoman said he would consult with the commission on their
opposing stand, assuring that the government intended to maintain
its control over the 10 state firms by selling no higher than 49
percent of its stakes. (bkm)