Selling state assets not govt priority
Rendi A. Witular, The Jakarta Post/Jakarta
Selling the government's shares in state enterprises was the lowest priority for the government, Vice President Jusuf Kalla said on Friday.
Speaking after Friday prayers at the his office, Kalla said the government would sell assets on its own timetable and would not hastily divest itself of valuable enterprises to plug the budget deficit or to comply with foreign donor requests.
"We don't want to sell our state companies at a low price. By revitalizing the state enterprises, we will obtain the same amount of proceeds as we would from privatizing them," he said.
Kalla said the government could obtain more proceeds to help ease the state budget deficit from the payment of dividends allocated by state enterprises, as well as from taxes paid by the companies.
The government aims to receive about Rp 9.5 trillion (US$1 billion) from the state enterprises dividends for this year's state budget. However, the government has also projected a Rp 3.5 trillion in earnings from its planned privatization program.
The government currently owns 158 state enterprises with combined assets valued at more than Rp 1.3 quadrillion (US$135 billion). It has been planning to merge 54 of the companies into 21 entities and put 38 others into 10 holding companies. The remaining 66 would continue operations as is.
In a bid to improve transparency and governance, the government will eventually sell shares in the 10 holding companies to the public via initial public offerings.
Kalla said the government would not bow to any requests from donor institutions, such as the Asian Development Bank (ADB), which pledged financial assistance in exchange for the sale of the government's stake in several state firms.
ADB had entered into agreement with the government to lend some US$250 million to help the country reduce its widening state deficit -- a deal that hinged on the government selling its minority stakes in a number of state companies.
The deal, however, was leaked to the press early this year with Minister of Finance Jusuf Anwar -- a former ADB executive -- later revising several requirements in the agreement by scrapping the condition to immediately sell state assets.
In the revised deal, ADB agreed to lower the level of the requirements for the loan by demanding the government first complete its draft law on state enterprises, which includes the process for selling stakes in state companies.
"We have to drop any deals with foreign donors, which demand the government sells our assets (forthwith). They should change their conditions if they want to disburse the loans to us," Kalla said.
Kalla was responding to local reports, which said Coordinating Minister for the Economy Aburizal Bakrie had ordered State Minister of State Enterprises Sugiharto to immediately complete the drafting of the bill on state companies.
The request, the reports said, was aimed at meeting the conditions set out by the ADB and also to meet revenue targets from the privatization process set out in the state budget.