Govt to put shares in 14 SOEs up for grabs

The Jakarta Post, Jakarta

A minister has announced that the state will sell stakes in 14 state-owned enterprises (SOEs) next year to help improve their performances and finance the budget deficit.

Steelmaker Krakatau Steel, construction firm Wijaya Karya (Wika) and lender Bank Tabungan Negara (BTN) would be three of the state firms in which stakes would be sold in order to achieve the first objective, State Minister for State Enterprises Sugiharto said during a hearing late Thursday with the House of Representatives' finance commission, while the sale of the other 11 firms would be to help cover the deficit.

These included Bank Negara Indonesia (BNI), Indonesia's second largest lender in terms of assets, Bandung-based electronics firm Inti, and a number of state-owned paper mills.

The stakes in Krakatau Steel and Wijaya Karya would be sold in part by way of an initial public offering (IPO), Sugiharto said, while the best method of selling BTN was still being assessed.

Krakatau Steel is Indonesia's largest steel producer, booking a 37 percent profit rise to Rp 8.04 trillion (US$874 million) in 2004.

The company has plans to construct a plant in Kalimantan and has been asked to supply the steel gas cylinders required under the government's campaign to increase the use of liquified petroleum gas (LPG).

Wijaya Karya, with experience in expressway construction, saw a 6 percent rise in profit to Rp 234 billion last year. Meanwhile, profits at BTN, a lender focusing on mortgages for the purchase of low-cost homes, increased 5 percent to Rp 275 billion during 2006's second quarter.

Sugiharto further said that the stake in BNI, of which the government still owns 99 percent, would be sold through a secondary offering, while the stakes in the other SOEs would be sold through strategic sales to prospective investors.

However, he did not mention the actual size of the stakes that would be offered, or how much cash the state expected to generate.

The government hopes to raise a total Rp 3.3 trillion from the sale of stakes in SOEs next year -- up from this year's Rp 3 trillion target -- to help finance a Rp 40 trillion deficit.

"I'm sure we can reach this target, considering the many highly prospective SOEs that we will be offering," Sugiharto said.

Meanwhile, the secretary at the State Ministry, Muhammad Said Didu, said the government would focus on selling a stake in state gas utility PT Perusahaan Gas Negara (PGN) in order to ensure that this year's target could be met.

Others SOEs being readied for sale included Adhi Karya and state power firm PT Perusahaan Listrik Negara (PLN)'s subsidiary, Indonesia Power.

SOEs to be privatized in 2007: ----------------------------------------------------------------

Line of business Govt. stake
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1. Krakatau Steel steel production 100%

2. Wijaya Karya construction 100%

3. Bank Tabungan Negara banking 100%

4. Bank Negara Indonesia banking 99%

5. Askrindo insurance 45%

6. Atmindo engineering 36%

7. Cambrics Primissima textiles 52%

8. Inti electronics 100%

9. Intirub Tires 9.9%
10. Jakarta Intl Hotel Devt hotels 1.3%
11. Dana Reksa finance 100%
12. Kertas Padalarang pulp and paper 40%
13. Kertas Blabak pulp and paper 1.6%
14. Kertas Basuki Rahmat pulp and paper 1.2%
---------------------------------------------------------------- Source: State Ministry for State Enterprises
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