Sale of Permata approved

Rendi A. Witular, Jakarta

After months of delay, the House of Representatives and the government reached an agreement to proceed with the divestment of the government's controlling stake in Bank Permata, the country's seventh largest bank in terms of assets.

The chairman of House Commission IX for finance, Emir Moeis, said the commission had approved the sale of a maximum 71 percent stake in the publicly listed bank.

"The commission concluded that the government can proceed with its plan to sell Permata, with the full authority to manage the timing of the sale," said Emir after a hearing with Minister of Finance Boediono on Wednesday.

The government, which has a 97.17 percent stake in Permata, plans to sell its controlling stake to raise cash to help finance the state budget deficit. It plans to sell its stake in two stages: first to strategic investors and then to public investors.

As for the sale of the government's remaining 26 percent stake in Permata, Emir said the commission would leave a decision on that up to the next government and House, who will be installed in October.

Boediono said the government had not decided on the share allocation for strategic and the public investors.

"We have not decided on the allocation yet. We may allocate 51 percent or more than 60 percent of the shares to strategic investors. We are still studying the matter," Boediono said.

The Permata stake is currently managed by PT Perusahaan Pengelolaan Aset (PPA), an asset management company under the Ministry of Finance.

PPA president director Mohammad Syahrial said the government was likely to allocate more than 51 percent of the Permata shares to strategic investors, as requested by several investors in order to have full control of the bank.

The government also received a recommendation from the commission to prioritize local investors in order to create healthy competition in the banking industry, as an increasing number of foreign investors have gained control of local banks.

The government, which is expected to reap about Rp 3 trillion (US$340 million) from the Permata sale, is scheduled to announce the winner of the bid in November.