City mulls privatizing three firms

Tifa Asrianti ,  The Jakarta Post ,  Jakarta   |  Thu, 11/06/2008 10:31 AM  |  City

The Jakarta administration is evaluating whether to privatize three city-owned enterprises in line with its objective to only maintain enterprises that serve the public.

The three enterprises being evaluated are hotel management company Grahasari Surya Jaya, taxi company PT Ratax Armada and Anker beer manufacturer PT Delta Jakarta, Eben H. Siregar, division head of city-owned enterprises at the economics bureau, said early this week.

"The three companies are business oriented. The administration wants to maintain enterprises focused on public service," Eben said.

The administration owns 8 percent of shares in Grahasari, 30 percent in Ratax and 26.3 percent in Delta Jakarta.

Eben said the administration planned to privatize the enterprises to prevent annual losses caused by share devaluation.

He said the administration would sell off its shares through a strategic sale, offering the shares to other shareholders before offering them to the public.

Nurmansjah Lubis, a councillor of Commission B overseeing economics affairs, said privatizing the companies was feasible given the city administration's objective.

Two of the companies still generate income for the city. Last year, Ratax contributed Rp 270.65 billion (US$24.77 million) or 73.02 percent of its Rp 370.65 billion income target, while Delta Jakarta recorded Rp 5.46 trillion or 307.25 percent of its Rp 1.79 trillion target.

The city administration previously set a target to privatize six city-owned enterprises this year because the companies had been experiencing losses since 1997.

The six enterprises are PT Jaya Nursukses, PT Pakuan International, PT Bumi Grafika, PT Alakasa Industrindo, PT Determinan Indah and PT Rheem Indonesia.

Governor Fauzi Bowo said his administration decided to postpone the privatization because of the global economic crisis.

"We don't want to receive low prices during the privatization process. Worse still, there is a chance that no one will be interested in buying them. So we will postpone it until the economic conditions have improved," he said.

The city administration expects to gain Rp 16 billion from the privatization. The funds received will be used for equity participation in Marunda bonded zone and the planned port development project.

The city administration currently owns 11.3 percent of shares in Marunda, while the rest of the shares belong to the central government. The equity participation is expected to raise the administration's ownership to 51 percent.

Equity participation in Marunda is estimated to reach Rp 411 billion. The city administration is hoping to make up the addition Rp 395 billion in the 2009 budget.

M. Nakoem, a councillor of Commission C overseeing finances, opposed the equity participation plan in Marunda because the area had limited access.

"Before developing the port, the administration should improve access and build toll roads to the area," he said.

Copyright © 2008 The Jakarta Post - PT Bina Media Tenggara. All Rights Reserved.