A new grouping of trade unions from state-owned enterprises and student groups linked to former ruling party Golkar are planning to use the planned sale of sale of telecommunications giant Indosat as a class action "test case" in their attempts to thwart the government's privatization program.
The Front to Save State Assets (Barisan Penyelamat Aset Bangsa: BPAB) said they were tired of being sidelined by the State-owned Enterprises Minister, Laksamana Sukardi.
If the government continues to push ahead with the privatization of strategic national assets in the absence of a Law on State-owned Enterprises, they would begin a class action against the minister and the government, BPAB Presidium member Zubeir Halim told detikcom Thursday.
The new group announced its formation and platform at a press conference in Jakarta last Wednesday.
The group's main aims are: a) stop the privatization of state-owned assets; b) the immediate formulation of a Law on State-owned Enterprises (UU BUMN) and; c) the replacement of Sukardi's ministry with an autonomous body to manage state assets.
The group admitted that it has not conveyed its demands directly to the ministry but said member organizations had attempted on numerous occasions to meet the minister to discuss privatization but had not been granted a hearing. They are now planning to meet leaders of the House of Representatives (DPR) as well as Vice President Hamzah Haz next week.
Another BPAB presidium member, Abu Syukur, said the privatization push should stop until the government and House endorse the Law because the government has privatized state assets in violation of legal procedures.
The group believes the sale price for the first stage of Indosat's privatization was too low – at Rp12,000 per share – after the company raised and spent trillions of rupiah to expand its business and make the company more attractive to foreign investors.
The group is not only focusing on the upcoming sale of a 41.9% stake in international call and cellular operator Indosat.
Although the detikcom report made no mention of possible industrial action by member organizations, they apparently have the potential to mobilize large numbers of supporters.
The group comprises trade unions from state-owned enterprises, private sector trade unions, non-government organisations as well as the Indonesian Muslim Students Action Front (KAMMI) and the Student Executive Council of the University of Indonesia (BEM UI).
The latter two groups have been linked in the past to the party that dominated Indonesian politics under the dictatorial regime of former President Suharto – Golkar.
When Indonesia's first democratically elected president, Muslim leader Abdurrahman Wahid, was toppled in July last year, these two groups were also at the vanguard of student demonstrations that many believed enjoyed the full support of rival Muslim political parties.
Under Wahid's successor Megawati Sukarnoputri the resistance to the privatization program sponsored by the International Monetary Fund (IMF) and other international creditors has festered.
But since the failure to privatize Bank Bali in 1999 amid massive protests against foreign ownership, the only major hurdle has been the case of the country's largest cement producer, Semen Gresik.
The greatest resistance to this sale came from Gresik's West Sumatra-based subsidiary, Semen Padang, where local legislators and the judiciary have blocked the government's every attempt to sell the parent company.
The government had planned to sell its stake in Semen Gresik and two subsidiaries for $525 million to Mexican cement company Cemex under a put option that matured in October last year.
BPAB Presidium member Zubeir Halim is also chairman of the workers union at the East Java-based Semen Gresik factory.
The Gresik mess is currently going through the courts in Jakarta as the government seeks to override the provincial ruling against the convening of an extraordinary shareholder's meeting in which to oust the recalcitrant board of directors.
At present, no legal hurdles per se are blocking the Indosat sale and Sukardi indicated two weeks ago that the October bombings in Bali would not affect the government's plans to sell the stake this year if the bids remained 'satisfactory'.
Other lose amalgamations of trade union groups opposed to privatization have made similar demands as the newly formed BPAB and even launched strikes and mass demonstrations in the past.
It remains to be seen if the new grouping represents further consolidation of this movement and if it will clash openly with the government, which remains committed to its privatization program as agreed with the IMF. Indosat Plans At Indosat, it's business as usual and strong market reaction to a Rp1 trillion bond offering prompted the company to raise the offering to Rp1.25 trillion in mid-October.
Indosat finance director Junino Jahja reiterated the company's continuing commitment to develop its lucrative cellular businesses next year and said Indosat has no plans to issue any new debt in the next three years.
Junino also told Dow Jones Newswires that Indosat has no plan to raise more funds by offering shares in its cellular business to the public.
He said Indosat was concerned to maintain its leverage at a reasonable level. As of June 30, Indosat's leverage was around 0.5, which analysts have said is a reasonable level for a telecommunication company of its size.
Junino said Indosat's plans to merge Satelindo, the country's second largest cellular operator, with its other cellular company, Indosat Multi Mobile Media (IM3), should be finalized by September 2004.
Satelindo currently has around 2.5 million subscribers and IM3 has around 250,000 subscribers but Junino said the number of cellular subscribers to Indosat's units would increase to around 4 -5 million next year.
Meanwhile, analysts forecast the number of nationwide cellular customers should nearly double to around 13 million next year from about 7 million currently.
Telstra Still Keen Despite evacuating nearly all its staff in Indonesia after the Bali bombings, Australia's Telstra last week said the Indosat stake was still well within its sights.
Telstra chief executive Ziggy Switkowski said the company remained interested and would "review our opportunities in Indonesia" although the Bali bombings heightened the risk surrounding any purchases in Indonesia.
"The appalling events of the last week, however, do not completely shut down our evaluation of potential future opportunities in Indonesia," he said, reported Asia Pulse.
Switkowski added the outlook for the telco industry remained very cautious, therefore there was no rush to make decisions at this point given that asset values had yet to stabilise and were still sliding in some areas.
Indosat's debt is not sliding in the eyes of state-owned ratings agency PT Pefindo, which last week announced that it was maintaining its AA+ rating on a range of the company's obligations.
The debt papers in question are the Rp1 trillion offered in 2001, the recent Rp1.25 trillion and the Rp175 billion in floating and fixed rate bonds of the "Syari'ah Mudharabah" offering, reported Bisnis Indonesia.