BI plans to sell off shares in 2008

Aditya Suharmoko, The Jakarta Post, Jakarta

Bank Indonesia said Tuesday it expected to sell off all its shares in a number of companies this year in compliance with existing central bank regulations.

BI deputy governor Budi Mulya said BI would sell its shares in Netherlands-based Indover Bank, insurance firm PT Asuransi Kredit Indonesia (Askrindo) and financial firm PT Bahana Pembinaan Usaha Indonesia by the end of this year.

"We hope the divestment process can be completed this year. We requested the government to take over all of our shares," said Budi after a meeting with House of Representatives Commission XI for the financial sector.

The 2004 law on the central bank stipulates the obligation for BI to sell its shares in companies because they are not related to the main task of a central bank.

The divestment process should be completed by Jan. 15, 2009, according to the law.

BI controls 55 percent of Askrindo and an estimated 82.2 percent of shares in Bahana, and entirely owns Indover.

Mulya said the government should control Indover because it is a valuable overseas asset that could help boost exports and trade between Indonesia and countries in Asia and Europe.

As of January last year, Indover's total assets were estimated to reach around 800 million euros.

Mulya also said the government should take over Askrindo and Bahana.

According to Mulya, the government injected Rp 850 billion (US$92.2 million) last year into Askrindo to help bolster the firm's performance.

The government is also still struggling to help BI revive Bahana's operation by restructuring the company's debts totaling Rp 1.2 trillion.

A member of House Commission XI, Dradjad H. Wibowo, suggested the government to shut down Bahana because its debts were out of control.

Bahana's debts originally amounted to Rp 250 billion between 1996 and 1997. However, the debts have soared because they carry a 48 percent annual interest rate.

BI needs to inject Rp 1.4 trillion to rescue the firm, Dradjad said.

He suggested the central bank consult with the Supreme Audit Agency, the State Development Finance Comptroller, the Attorney's General Office and the Supreme Court before divesting its shares in Indover in order to prevent any irregularities.