Robert Go, Jakarta – Potholed roads, crumbling hospitals, torn school books – that is the bleak picture in store for Indonesia if the government fails to sell immediately some of its assets to investors, warned the top official of the International Monetary Fund (IMF) in Jakarta.

IMF Senior Resident Representative David Nellor said during a press briefing yesterday that the government had to raise some quick cash by selling state-owned companies and assets it took over during the financial crisis.

Otherwise, Jakarta would be forced to redirect money slated for development – building schools, health clinics, roads or bridges – to pay its other bills and service its mounting debts. "If the government is unable to secure revenue from privatisation, the choice is to reduce development spending on infrastructure, education, and health care," Mr Nellor said.

Such government action threatens to make life more difficult for around 50 per cent of the population. Analysts said about that many already live below or near the poverty line.

International investors – already spooked by political instability and sectarian violence in Indonesia and the declining global economy – could view the asset-sale delays as an indication of Jakarta's lack of commitment to revive its private sector. Said Mr Nellor: "Selling key assets is important, as it signals the government's seriousness towards achieving reforms. It enhances the government's credibility."

Incidentally, the minister in charge of asset sales and privatisation in Indonesia happens to be Mr Laksamana Sukardi, a former banker with a clean reputation and a "tough executive" professional record.

But President Megawati Sukarnoputri's three-month-old government has yet to produce concrete results on privatisation. Bank-restructuring agency Ibra, tasked with managing and selling nationalised assets valued three years ago at more than 650 trillion rupiah (S$123.5 billion), is far short of this year's revenue target of 27 trillion rupiah.

Jakarta has also failed so far to get a single rupiah for the 16 state-owned companies that are slated for sale by December to fetch a total of 6.5 trillion rupiah. Parliament, which does not actually have the right to rule on the government's privatisation efforts, has also blocked several sale plans.

From the IMF's point of view, and that of other international creditors, Indonesia is running out of time. Mr Nellor said: "It's not a question of if, but of when, assets should be sold. The quicker, the better." Given the economic conditions in the region and globally, waiting any longer to sell the assets might actually be detrimental to Indonesia's interests, he added.