Senior legislators object to Temasek bid for Permata

Senior legislators object to Temasek bid for Permata

Rendi A. Witular, Jakarta

Temasek Holdings, an investment arm of the Singapore
government, is likely to face hurdles in bidding for a majority
control in Bank Permata following a plan by several key
legislators that would give local investors a better chance to
buy the bank.

Chairman of the House of Representatives' Commission IX for
financial affairs Emir Moeis said on Monday that the Commission
would recommend that the government make it "easier" for local
investors to bid on the controlling stake in Permata.

"Temasek already owns several local banks, and I think that is
enough. We want a 'healthier competition' in the banking sector
by empowering local banks or European banks," said Emir, who is
from the Indonesian Democratic Party of Struggle (PDI-P).

However, Emir said that he was not asking the government for
an outright ban on Temasek in the bidding because it would be
against free trade principles adopted by the World Trade
Organization, of which Indonesia is a member.

"We don't recommend a ban on Temasek. We just want the
government to create a more favorable bidding process for local
banks, which have sufficient assets and quality, to own Permata.
But the local banks should not be those that are controlled by
foreign banks," he said.

The government plans to sell 71 percent of its total 91.3
percent ownership in publicly listed Permata, which was
established two years ago by merging five ailing banks. The
proceeds from the sale would be used to help finance the state
budget deficit.

The stakes are currently managed by PT Perusahaan Pengelolaan
Aset (PPA), a new entity under the auspices of the Ministry of
Finance.

The ministry had previously obtained the approval of
Commission IX to sell a 20 percent stake in Permata to public
investors via a secondary offering, but had yet to obtain
approval for the sale of the controlling 51 percent stake. The
Commission is slated to give the approval on Wednesday. By law,
the selling of government shares in banks must be approved by the
House.

As reported by several local media, Temasek is among the 19
investors bidding for Permata via Bank Danamon and Bank
International Indonesia (BII).

Temasek, which manages US$40 billion worth of funds and
assets, had already bought 62 percent of the government's stake
in Danamon through Asia Financial Holdings consortium, and 51
percent in BII via Sorak Financial Holdings consortium. It also
owns a 41.94 percent stake in telecommunications firm PT Indosat
via ST Telemedia.

Deputy chairman of Commission IX Paskah Suzetta agreed with
Emir, and suggested that the government put forth qualified local
banks to acquire Permata rather than giving foreign banks a
chance to bid, to encourage local banks to become global banking
players.

"I prefer Bank Mandiri or Bank Negara Indonesia (BNI) to take
control of Permata. They can form a consortium to financially
support the takeover," said Paskah, who is from the Golkar Party.

"We want to try to prevent any suspicion or fear from the
public over issues that the country's financial industry will be
invaded by Singapore. I know that it is a free market, but we
want to make it easier for local banks to own Permata," he said.

Local banks such as BNI, Bank Central Asia, Bank Panin and
Bank Artha Graha had reportedly been interested in bidding for
Permata.

However, BNI president Sigit Pramono said that BNI had decided
not to join in the bidding, as it would jeopardize BNI's capital
adequacy ratio (CAR) and violate central bank regulations.