The Jakarta Post, Jakarta

The government is likely to cancel the disposal of its 51 percent stake in medium-sized Bank Niaga to strategic investors due to low bidding prices submitted by the bidders, State Minister of State Enterprises Laksamana Sukardi indicated on Wednesday. Laksamana, however, said that the final decision on the high profile sale plan would be decided by the Financial Sector Policy Committee (FSPC) in a meeting scheduled for Thursday. "I personally think that if the offered prices are considered far below the market price, it's better (for the strategic sale) to be canceled," he said. Laksamana, together with other economic ministers, are members of the FSPC, which has the final say on the government's major asset sale program. Asked about his personal view on the prices submitted by the current bidders, whether they were too low, Laksamana simply said:" Yes ..more or less". Laksamana had earlier said that if the sale to strategic investors was canceled, the government would sell the bank shares via other mechanisms including a private placement. There are currently two consortia vying for a controlling stake in the publicly listed Bank Niaga, each led by Malaysia's Commerce Asset Holding Bhd. and ANZ Banking Group Ltd. The two bidders submitted their final bids on Monday. The government has so far declined to disclose the price of the bids it received, but rumor has it that the highest bid was made by Commerce at around Rp 30 per share or some $130 million for a 51 percent stake, given that Bank Niaga has 78 billion total shares outstanding. In comparison, Bank Niaga shares were trading at around Rp 75 per share on Wednesday. The government, through the Indonesian Bank Restructuring Agency (IBRA), owns a 97.15 percent stake in Bank Niaga. It took over and recapitalized the bank in the late 1990s after no shareholders of the bank were willing to spend their money to help finance the bank's recapitalization program. The divestment of the Bank Niaga stake is part of the government's asset sale program for this year to raise cash to help finance the 2002 state budget deficit. The International Monetary Fund has insisted the government should not delay the sale program. Any delay in the asset sale program would not only hamper IBRA's efforts to raise more than Rp 35 trillion in cash this year, but would also hurt sentiment in the rupiah, which has been gaining ground lately. News about the possible cancellation in the Bank Niaga sale had caused the rupiah to decline from its intraday high on Wednesday, although the unit still managed to end up slightly higher at Rp 8,850 per U.S. dollar from Rp 8,870 at Tuesday's close. The rupiah has been in a bullish run recently amid hopes of more dollars entering the country from the sale of various government assets. However, the hardest part of the cancellation would be to convince investors that the country is still committed to its economic reform program. Confidence in the country's commitment on reform has been high following the sale of Bank Central Asia (BCA) to U.S.-based investment firm Farallon Capital last March.

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The Jakarta Post, Jakarta

The country's oil- and gas-producing regions demanded the central government include them in calculating revenue split from the two commodities or let an independent consultant do the job to ensure fairness and transparency. "We want to be involved in a team to calculate the split, or let's appoint a credible independent consultant to do it," Irianto M.S. Syaifuddin, chairman of the association of oil and gas producing regencies (FKDPM), told The Jakarta Post on Wednesday. He is also the regent of Indramayu, West Java. "Our demand is clear; we want the central government to be transparent," he added. FKDPM said earlier that oil- and gas-producing regions would blockade oil and gas operations in their areas unless the government revoked the finance ministry decree that stipulates this year's revenue split from the two commodities between the regions and the central government. The association has set June 1, 2002, as the deadline. But Minister of Finance Boediono warned the regions on Tuesday against carrying out a blockade as such a move would be disastrous for their economies. He said that the blockade would scare investors away. Boediono urged the protesting regions to come to the negotiation table. The regions have said that the revenue split formula set in the finance minister's decree gives them very little revenue from oil and gas, and that the split was not equal to what is stipulated under the Intergovernmental Fiscal Balance Law No. 25/1999. Under the law, oil-producing regions are entitled to 15 percent of revenue from the commodity (the central government takes 85 percent) and 30 percent from gas. Of the 15 percent oil revenue split, the oil-producing regency administration will receive 6 percent, while the remainder is distributed between the provincial administration and other regencies in the province. But FKDPM said that according its calculations based on the finance ministry decree, the producing regencies would get only 1 percent to 2 percent in oil revenue this year. The split between the central government and the oil- and gas-producing regions was set out as part of the government's autonomy policy launched in 1999 to help appease demands from resource-rich provinces for secession from the country. But poor implementation of the autonomy policy has scared investors away, including oil and gas companies, as local governments have often implemented unfriendly policies that are not in conformity with contracts signed with the central government in the past.

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