Questioning privatization now

Questioning privatization now

The Bali blast has weakened the financial markets in Indonesia
although in the last few days there has been a modest rebound.

This situation has led to a question about the government's
economic program such as privatization of state-owned enterprises
and bank divestment. When the financial market is weak, the
result of this program will certainly be far from satisfactory.

However, the government is faced with a dilemma. To go on with
the program would mean a low yield (unfavorable price for
privatized assets) while to postpone the program would lead to
doubts about its commitment to reform.

In such a situation, in which the investors' trust in our
government is low, the government must do something to enhance
its credibility. Most important of all is that it seriously
investigates and solves the Bali bomb case and shows its strong
commitment to eradicate terrorism by, for example, issuing a
regulation in lieu of a law against terrorism.

If the restoration of security takes longer than expected, the
government may postpone its economic program. The government must
not sacrifice the long-term purpose of privatization for its
short-term demand, such as covering the budget gap.

It must be remembered that, given the fairly weak market, even
strategic sales will benefit only the investors.

-- Bisnis Indonesia