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Indonesian Minister Hopes to Privatize State-Owned Businesses


The Indonesian government says it hopes to privatize its more than 100 state-owned enterprises in an effort to raise money for the cash-strapped budget, improve transparency, and encourage foreign investment. Chad Bouchard reports from Jakarta.

Sofyan Djalil, Indonesia's minister for state enterprises, says he would like to work himself out of a job over the next few years.

The Indonesian government currently owns about 120 companies valued at almost $147 billion, many of them a holdover from the notoriously corrupt era of former President Suharto's rule. Djalil's ministry oversees them.

The newly appointed minister told reporters Thursday that he plans to reduce the number of state-owned enterprises, or "SOEs," to less than 100 by the end of this year. He plans to group many of them under one large public holding company, and eventually list the remainder on the market.

Djalil says he hopes to reduce the number of SOEs to 50 during his two and a half year term - and to zero if he serves a second term as minister.

"I will put all my state-owned enterprises into the market to force them to be more transparent, to be more accountable, and to be more sensitive to the, you know, the up and down of the market," said Djalil. "And then you will change also the culture of these SOE's if they become a public company."

State businesses such as Garuda Airlines, and the oil and gas producer PT Pertamina, have been criticized for financial mismanagement and a lack of transparency.

Public companies would be subject to oversight by investors, and quarterly reports would be required by law.

Indonesia also owns some of the world's largest mineral operations, but Djalil says individually, they lack bargaining power and have often missed out on better trade terms.

He says a holding company combining the assets of many small companies would give the Indonesian businesses more muscle.

"Because I see the potential of the state-owned enterprise is so great, the problem is simply under-manage, mismanage, too much bureaucracy, and too much maybe politics," said Djalil. "So that if we can reduce bureaucracy, we can shed the state-owned enterprise from political intervention."

Djalil says the availability of publicly traded shares would encourage direct investment from foreign companies.

Foreign investors have been reluctant to begin operations in a country with a reputation for corruption and legal uncertainties.