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.