Privatization will benefit economy, VP says

Rendi A. Witular The Jakarta Post/Jakarta

Defending its stance over the privatization program, the government has asked for public understanding for its plans to sell state firms that make little contribution to the state, arguing it would eventually benefit the economy in general.

"There will be an economic efficiency if the government sells unprofitable state firms. The firms were formed during the Dutch colonial era and have now become burdens to the state," Kalla said after the Friday prayer.

The government would conduct further study for one month before deciding which companies are to be merged or sold to the public or to local administrations, he said.

The government, however, would not be selling companies cheaply.

"In the future, state companies that remain under government control are the ones that are strategic, have good prospects and are profitable, as well as operating for the public benefit," he said.

At present, the government is burdened with managing 158 state companies with combined assets worth about Rp 1,300 trillion (about US$133 billion). However, only about a dozen of them contribute any revenue to state coffers.

Most of the companies are currently in bad shape due in part to mismanagement and corruption amid the government's limited ability to properly supervise and set clear-cut policies to develop them.

The government is now trying to speed up the sale of several unprofitable and burdensome state enterprises, in particular those enterprises that have no public service obligations or that are not strategic in any way.

Almost always, however, such plans draw criticism and carry risks of being politicized, with narrow sectional interests saying that privatization goes against the national interest.

According to the blueprint on the development of state firms issued by the Office of State Minister of State Enterprises, the government will only sell an entire stake in companies that do not give any advantage to the state.

As for profitable companies, the government will only sell a part of its stake via the stock market, with the aim of helping to plug the budget deficit. Under this program, this year proceeds from privatization of state assets have been set at Rp 3.5 trillion.

Among the state companies included in such category are Bank Negara Indonesia (BNI), and mining companies PT Antam, PT Timah and PT Bukit Asam Batubara.