JAKARTA, Sept 19 (Reuters) - An Indonesian parliamentary commission has approved government plans to privatise three state firms including the country’s biggest steel maker via initial public offerings (IPO), a parliament member said on Friday.
The approval means the government can proceed with stake sales in steelmaker PT Krakatau Steel, home-loan focused PT Bank Tabungan Negara (BTN) and national airline PT Garuda Indonesia.
“Regarding the timing, it’s in the hands of the government, to ensure maximum results,” said Asman Abnur, vice chairman of the commission which handles finance and banking.
He added maximum stakes sale had been set at 30 percent for BTN and Krakatau Steel, while Garuda Indonesia had been set at 40 percent.
ArcelorMittal SA ISPA.AS, the world’s largest steelmaker and BlueScope Steel Ltd (BSL.AX), Australia’s largest steelmaker, have shown an interest in acquiring a stake in Krakatau Steel.
Krakatau Steel aims to raise 3.2 trillion rupiah in the IPO, according to a document from the firm.
Krakatau Steel’s president director, Fazwar Bujang, said in an interview with Reuters on Sept. 3 that it would use the IPO proceeds to help finance expansion plans of more than $1.5 billion. The firm aims to double its steel production to 5 million tonnes by the year 2011.
Garuda Indonesia, which together with all 51 Indonesian airlines has been banned from European Union airspace because of safety concerns after a series of accidents, has said it will use the proceeds to pay down some of its debt and invest in new planes.
The Indonesian government had said proceeds from the stakes sales in the three firms would be used to allow the firms to expand and to improve performance.
Previously, the government has used part of the proceeds from privatisation sales to help fund the country’s budget deficit.
Other privatisation candidates include plantation firms Perkebunan Nusantara III, IV and VII. (Writing by Adreas Ismar; Editing by Ed Davies)
The parliament of Indonesia has approved government plans to make an Initial Public Offering (IPO) of shares in three major state-owned firms, privatising them. They are steelmaker Krakatau Steel, Bank Tabungan Negara (BTN) and national flag carrier Garuda Indonesia.

The parliament has left the process fully in the hands of the government, and has set the maximum stake to be sold at 30% for BTN and Krakatau, and 40% for Garuda. Although Indonesia has been known to fund budget deficits with privatisation, the intention is for the funds from this scheme to go to the businesses themselves to allow expansion.

Krakatau expects 3.2 trillion Rupiah (IDR) from the sale, while the estimated price for their stock is between IDR3 and IDR4 trillion (321 - 428 million USD). Both ArcelorMittal SA, the biggest steelmaker in the world, and BlueScope Steel Ltd, the largest in Australia, have expressed an interest in the IPO. Krakatau will use the funds to help finance an expansion scheme which aims to have production doubled to five million tonnes in 2011.

BTN, which focuses on home owner loans, has set itself a target income of IDR36.12 trillion (3.86 billion USD) in 2010 compared to a projected IDR22.9 trillion ( 2.45 billion USD) this year. Net profit for this year is projected at IDR472 billion (50.5 million USD)and is hoped to rise to IDR1.39 trillion (148.7 million USD) in 2010. The bank's loan to deposit ratio is predicted to rise from 105.05% this year to 144.93% in 2012. BTN hopes to conduct its IPO before the end of 2008.

Garuda is not quite 100% state-owned to start with, unlike the other two, but is very close with 95.44% of the company belonging to the government. Like all of Indonesia's 51 airlines, Garuda is on the list of air carriers banned in the EU due to safety concerns raised after a string of air accidents in the nation. Garuda expects to raise IDR4.2 trillion (449.4 million USD) in funds from the IPO, and will use IDR2.5 trillion (267.5 million USD) to pay off its debts and invest IDR1.7 trillion (181.9 million USD) in new aircraft.

The government is still working to get a deal to make IPOs for architectural firm Yodya Karya and three plantation firms called Perkebunan Nusantara III, IV and VII.