New minister to jump-start Indonesian privatization process

Indonesia's new coordinating Minister of Economy, Rizal Ramli, said this week that his office would take charge of the 155 state enterprises in order to speed up their privatization. Jakarta had planned to raise some $790 million from the privatization of 10 state firms during April-December 2000. And last fall, efforts to strip state oil firm Pertamina of much of its strength stalled after more than 4 months of debate in the House of Representatives (OGJ, Sept. 13, 1999, Newsletter).


JAKARTA�Indonesia's new coordinating Minister of Economy, Rizal Ramli, said this week that his office would take charge of the 155 state enterprises in order to speed up their privatization.

Following last week's reshuffle of the cabinet, the government decided to set up a special body that included all ministers who had state enterprises operating in their respective fields, Ramli said. The special body includes Energy and Mineral Resources Minister Purnomo Yusgiantoro, Trade and Industry Minister Luhut Pandjaitan, Finance Minister Prijadi Praptosuhardjo, Transportation and Telecommunications Minister Agum Gumelar, and Agriculture and Forestry Minister Bungaran Saragih.

Ramli said he had asked for the former Ministry of Investment and State Enterprises to submit a review of progress in the privatization of state enterprises. The ministry was dissolved following the election of the new cabinet.

Jakarta had planned to raise some $790 million from the privatization of 10 state firms during April-December 2000. And last fall, efforts to strip state oil firm Pertamina of much of its strength stalled after more than 4 months of debate in the House of Representatives (OGJ, Sept. 13, 1999, Newsletter).

None of the state entities have been privatized because of weak market sentiment.

Ramli also said the government would review its planned hike in fuel prices, due to start in October, as the result of an expected windfall of $1.3 billion from oil exports.

"We will look at various options available to reduce the gap in fuel prices in the local and international markets," Ramli was quoted as saying by the Jakarta Post. In a bid to cut subsidy spending of about $2.1 billion. The government first planned to raise fuel prices on Apr. 1 of this year.

The government based its current budget on an oil price of $20/bbl and a rupiah-to-US-dollar exchange rate at 7,500:1. However, the price of crude has been averaging $28/bbl, while the rupiah exchange rate has been about 8,200:1.

Rachmat Sudibyo, director general of oil and gas at the energy ministry, pointed out that Jakarta would earn an additional $350 million from oil exports for every dollar increase in the crude price. But at the same time, subsidies on oil imports had also gone up by $200 million, he added.

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