Indonesia relaunches privatisation drive
Wednesday, 13 June 2007
Joe Cochrane from Jakarta
Indonesia is to relaunch efforts to privatise dozens of state-owned companies, beginning with a public offering of one of the country's largest state-owned banks, a senior government official said Thursday.
Sofyan Djalil, the minister for state-owned enterprises (SOEs), also called for an Indonesian holding company to manage state-owned businesses, similar to Singapore's Temasek and Malaysia's Khazanah, to improve performance and reduce political interference.
Indonesia's SOEs have been viewed as mismanaged, inefficient, open to corruption, and cash cows for the election chests of political parties.
"If SOEs are managed by bureaucracy and too much politics. It's not good," the minister told members of the Jakarta Foreign Correspondents Club. "It is my wish that I am the last minister of state-owned enterprises."
Djalil wants to reduce the number of SOEs from more than 100 to about 50 before the presidential election in 2009.
The government will promote the listing in August of Bank Negara Indonesia(BNI), one of the three largest state-owned banks.
In September, the minister said, the government plans to promote the listing of PT Jasa Marga, a toll road operator, and PT Wijaya Karya, a construction firm.
Djalil surprised observers last month by calling on the government to reduce the dividends it takes from state-owned companies for the state budget, saying it was affecting them negatively.
He told the luncheon that he wanted to clean up the management and increase the transparency of state-owned enterprises to make them more attractive. He also said he would ask parliament to approve putting 20 additional companies, which he declined to name, into the market at once.
"Whichever SOEs I can put into the public to become a public company, I will do it," said Djalil, who until last month was Indonesia's information minister. "I think the potential of SOEs is so great."
He said the government hoped to raise $1bn by selling a 30 per cent stake in Bank BNI in the capital market. The bank is currently 99.1 per cent owned by the government and has a market value of around $3.5bn.
Analysts said Djalil's statement was surprising because previous ministers had wearied of pushing privatisation, a sensitive political issue in Indonesia.
"It's a breakthrough," said Fauzi Ichsan, an economist at Standard Chartered in Jakarta. "For a long time the pace of the privatisation program was sluggish and now we have a new minister who's more committed to accelerating privatisation."
However, Ichsan warned that the privatisation of BNI could still be "subject to a lot of political interests" such as government officials pressuring its management to approve certain loans because it will remain majority owned by the state.
Stephen Schwartz, the International Monetary Fund's representative in Jakarta, said the government needed to think about the rationale of public ownership in certain industries, including the banking sector.
"If there's not a clear rationale or strategic objective then the government could consider privatisation and even strategic sales as ways to improve efficiency over the medium term," he said.
Under syndication arrangement with FE
Indonesia is to relaunch efforts to privatise dozens of state-owned companies, beginning with a public offering of one of the country's largest state-owned banks, a senior government official said Thursday.
Sofyan Djalil, the minister for state-owned enterprises (SOEs), also called for an Indonesian holding company to manage state-owned businesses, similar to Singapore's Temasek and Malaysia's Khazanah, to improve performance and reduce political interference.
Indonesia's SOEs have been viewed as mismanaged, inefficient, open to corruption, and cash cows for the election chests of political parties.
"If SOEs are managed by bureaucracy and too much politics. It's not good," the minister told members of the Jakarta Foreign Correspondents Club. "It is my wish that I am the last minister of state-owned enterprises."
Djalil wants to reduce the number of SOEs from more than 100 to about 50 before the presidential election in 2009.
The government will promote the listing in August of Bank Negara Indonesia(BNI), one of the three largest state-owned banks.
In September, the minister said, the government plans to promote the listing of PT Jasa Marga, a toll road operator, and PT Wijaya Karya, a construction firm.
Djalil surprised observers last month by calling on the government to reduce the dividends it takes from state-owned companies for the state budget, saying it was affecting them negatively.
He told the luncheon that he wanted to clean up the management and increase the transparency of state-owned enterprises to make them more attractive. He also said he would ask parliament to approve putting 20 additional companies, which he declined to name, into the market at once.
"Whichever SOEs I can put into the public to become a public company, I will do it," said Djalil, who until last month was Indonesia's information minister. "I think the potential of SOEs is so great."
He said the government hoped to raise $1bn by selling a 30 per cent stake in Bank BNI in the capital market. The bank is currently 99.1 per cent owned by the government and has a market value of around $3.5bn.
Analysts said Djalil's statement was surprising because previous ministers had wearied of pushing privatisation, a sensitive political issue in Indonesia.
"It's a breakthrough," said Fauzi Ichsan, an economist at Standard Chartered in Jakarta. "For a long time the pace of the privatisation program was sluggish and now we have a new minister who's more committed to accelerating privatisation."
However, Ichsan warned that the privatisation of BNI could still be "subject to a lot of political interests" such as government officials pressuring its management to approve certain loans because it will remain majority owned by the state.
Stephen Schwartz, the International Monetary Fund's representative in Jakarta, said the government needed to think about the rationale of public ownership in certain industries, including the banking sector.
"If there's not a clear rationale or strategic objective then the government could consider privatisation and even strategic sales as ways to improve efficiency over the medium term," he said.
Under syndication arrangement with FE