Privatizing quick quick

Privatizing quick quick

I refer to Mr. Seamus McElroy's letter Privatizing slowly-
slowly in The Jakarta Post on Sept. 11, 1998. He is right on the
mark. Not only is the privatization of state enterprises
necessary, it should have begun last October.

Permit me to give an example. In July, Brazil privatized its
telecommunications company in a no holds barred total sell off in
which foreigners were free to buy a 100 percent stake. Bidders
paid US$19 billion, 60 percent over the minimum asking price. Had
they not privatized the company in July and instead waited for
October's election, the money raised through the sale would have
been cut by half as a result of the Russian meltdown.
Furthermore, a demonstrated reluctance to privatize would have
sent the wrong signals to the market and the government may have
been force to devalue the Real. The lesson is clear -- the longer
you take to become integrated into the global economy, the harder
it is to do. And there is no alternative.

Would it be better to privatize Garuda Indonesia immediately
or continue to cut it in size until it ends up closing down as
Philippines Airlines announced it would have to last week?
Indonesia is not sending the right signals to the market. When
will PT Telkom be privatized? Is there a plan for an agency to
regulate telecommunications in a privatized environment? It is
not good enough to simply transfer a state monopoly into the
private sector, so will licenses be issued to other companies so
that they can set up operations and compete with a privatized
Telkom? These are a few of the questions the market would like to
have answers to. The lukewarm talk of making state enterprises
profitable before selling them and of possible restrictions to
investment is not convincing the market.

OSVALDO COELHO

Jakarta