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