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)