Caution is essential in Indonesia's program to sell stakes in state firms because of its politically sensitive nature, the state enterprises minister warned on Wednesday.

Mustafa Abubakar said pushing ahead with public offerings for state firms would be hard because of lingering public perceptions that it was in effect selling off state assets to foreign investors.

"So we'll be very selective in picking which will go public and which will not," he said in a visit to the Jakarta Globe.

Last year, the government obtained the approval of the House of Representatives to sell stakes in five state firms through initial public offerings. They are lender PT Bank Tabungan Negara, flag-carrying airline PT Garuda Indonesia, steelmaker PT Krakatau Steel and construction companies PT Pembangunan Perumahan and PT Waskita Karya.

But as 2009 closed, the government had only managed to proceed with the IPO of BTN, partly because it was worried the global financial crisis would have lingering effects on market confidence.

It managed to raise Rp 1.88 trillion ($203 million), passing its Rp 1.5 trillion target. It raised Rp 581 billion from the IPO of Pembangunan Perumahan this month, well below the target of Rp 1.5 trillion.

Mustafa said the priority was now on proceeding with the IPOs first of Garuda and then Krakatau Steel. Garuda's IPO, set for the third quarter of this year, is hoped to raise $300 million, he said.

So far, 16 state-owned enterprises have been listed on the stock exchange. Mustafa confirmed that shares sales would continue to form part of his overall strategy to boost the performance of the country's some 140 SOEs.

While experts argue that taking them public would benefit SOEs as it would help improve their performance by bringing, among other things, better governance and efficiency, the government in the past has had trouble realizing the program due to strong political opposition.

Two high-profile examples were the sale of telecommunication company PT Indosat to Singapore Technologies Telemedia and the sale of shares in cement company PT Semen Gresik to Mexico's Cemex a few years ago.

While not all SOEs will be taken public, Mustafa said, he wants some of them, especially key ones, at least to adopt the norms and protocols applied in the stock market, which he described as "something positive."

He cited state oil and gas company PT Pertamina, which the government is pushing to become a nonlisted public company, requiring it to adopt disclosure guidelines set by the stock-market authority. "If this is successful, [state electricity utility] PLN will follow suit," Mustafa said.

Being studied, he said, is the possibility of secondary offerings for PT Bank Mandiri and PT Bank Negara Indonesia to increase their floated shares to at least 40 percent to gain a tax incentive.

The former chief of the State Logistics Agency (Bulog) said his strategy to help improve the SOEs' efficiency and profitability included mapping their strengths and weaknesses, "regrouping" and "right-sizing" them.