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Privatization program hits more snags

Wall Street Journal - March 23, 1999

Jakarta – Indonesia's struggling privatization program suffered another setback Monday, when the government said it won't complete three key sales this fiscal year.

The State Enterprises Ministry said in a statement the sale of a stake in PT Indonesia Satellite Corp., gold and nickel miner PT Aneka Tambang and the management contract for Jakarta's Soekarno Hatta International Airport have been put off to the next fiscal year, starting April 1.

The ministry said it expects the sale of the strategic stake in the international call operator Indosat to be completed in July this year. More time is needed, the ministry said, to draw up a clear regulatory framework for the telecommunications sector.

In addition, the Ministry of Communications will issue new telecommunications licenses to both PT Telkom, the domestic call carrier, and Indosat. Details of the new licenses will be available once the blueprint is finished.

The sale of Aneka Tambang will be delayed to August. The ministry said the government is in the process of modifying the privatization structure in line with the continuing corporate restructuring of Aneka Tambang.

As for the privatization of the Jakarta airport manager Angkasa Pura II, the government has deferred the final bid deadline to April 20, from March 26, to clarify regulatory issues.

The government expects to strike a deal "as soon as a definitive agreement has been reached" on the Jakarta International Container Terminal of PT Pelabuhan Indonesia II (Pelindo II). Hong Kong-based Hutchison Whampoa Ltd. is the preferred bidder in the deal.

The government said discussions with the preferred bidder for Terminal Peti Kemas Surabaya of PT Pelabuhan Indonesia III should begin shortly.

So far the government only has raised about $380 million in its privatization drive to raise $1 billion by the end of March.

It sold a 14% stake in cement maker PT Semen Gresik to Mexico's Cemex SA for $121 million and a 10.2% stake in PT Indofood Sukses Makmur for $59 million and will get possibly $200 million for the container port Pelindo II.