Robert Go, Jakarta – Indonesia is already hard-pressed to meet asset-sale targets of over 33.5 trillion rupiah (S$6.7 billion) this year, but President Megawati Sukarnoputri's Budget proposals, due to be announced today, will set an even higher goal of nearly 42 trillion rupiah for 2002.
This money will be raised through divesting stakes in state-run or nationalised assets. Finance Ministry sources said the government will use a "60-40 formula" to determine how revenues generated by asset sales are used.
The Indonesian Bank Restructuring Agency (Ibra) and the state-owned Enterprises Ministry, both government agencies, are tasked with selling the assets. Of the money raised by them, about 25 trillion rupiah, or roughly 60 per cent of the next year's total target, will go towards financing part of the Budget deficit. The other 40 per cent will be used by the government to retire some of the 650-trillion rupiah worth of high-interest bonds that have been issued to prop up the country's failing banks since 1998.
Finance Ministry officials described their asset-sale projections as "ambitious but achievable". They admitted, however, that mounting pressure stemming from the state's debilitating US$150-billion debt and the overall severity of Indonesia's financial woes are forcing the government to put more and more assets on the auction block.
A close aide to Finance Minister Boediono, said: "It has to be an aggressive target. It's possible. There are lots of good assets to be offered. The reality is that we have many obligations to fulfil and very few options."
Indonesia has several prime assets that could attract foreign investors and their cash into the country, and could be offered for sale in the future. Analysts consider Bank Central Asia (BCA), which was previously owned by the Salim Group and is the country's biggest consumer bank, as a "steal at current market prices". Parliament is now debating whether to approve plans to sell 51 per cent of BCA before the end of the year, after blocking several previous government attempts to sell it. State-run telecommunications operator PT Telkom, with nearly US$1 billion in total sales last year, is another blue-chip asset that could be unloaded quickly.
But despite the availability of assets, and the climate of optimism that has come to prevail in Jakarta since Ms Megawati's ascension to the presidency in late July, analysts have predicted a continuing struggle for the asset-sale programme.
Dr Sri Adiningsih of University of Gadjah Mada said: "It will be a tough process. It's a confidence game, and if the government does not meet its target this year, it will make next year that much more difficult."
Ibra, now led by its sixth chairman in less than three years, is tasked with selling off nationalised assets valued at nearly 600 trillion rupiah, but has raised only 14 trillion rupiah so far this year.
New state-owned Enterprises Minister Laksamana Sukardi, who now oversees the operations and possible sale of state assets worth around US$130 billion on paper, said recently that it would be difficult to sell any before the end of December.