House approves IPO of three state firms` shares
Jakarta (ANTARA News) - The House of Representatives (DPR) Thursday approved the government`s proposal to privatize three state firms through an initial public offering (IPO).The three are steel maker PT Krakatau Steel, Bank Tabungan Negara (BTN) and Garuda Indonesia.In the working meeting with the Office of State Enterprises Minister and the Finance Minister at the parliamentary building on Thursday, the House Commission XI said it fully left the IPO of the three state firms` shares to the government.The House Commission which deals with finance, national development planning, banking and non-bank financial institutions said the IPO should consider the proper time so that it would yield an optimum result both for the government and the state firms themselves.The House was still undecided about the government`s proposal to privatize PT Yodya Karya and three state plantation companies, namely PTPN III, IV and VII through an IPO.However, the House and the government agreed to further discuss the proposal either at a plenary session or a meeting of the working committee on the privatization of state firms.Krakatau Steel which is 100 percent owned by the government is allowed to sell a maximum of 30 percent of its shares with proceeds from the IPO estimated at Rp3 trillion to Rp4 trillion.The steel maker is expected to use the funds to finance its business expansion plan which will cost Rp16.4 trillion in the next three years.Both the House and the government also agreed to allow BTN which is also 100 percent owned by the government to sell 30 percent of its shares at the most to the public.The bank has set itself a target of raising income to Rp36.12 trillion in 2010 from the projected Rp22.9 trillion this year on the assumption that it could conduct the IPO in the fourth quarter of 2008.The bank expects its net profit to surge to Rp1.39 trillion in 2010 from the projected Rp472 billion this year.Meanwhile, its loan to deposit ratio (LDR) is projected to increase to 144.93 percent in 2012 from 105.05 percent in 2008.Garuda Indonesia which is 95.44 percent owned by the government is allowed to float a maximum of 40 percent of its shares to the public.The national flag carrier has expected to raise Rp4.2 trillion in funds from the IPO and planned to use Rp2.5 trillion of the funds to repay its debts and Rp1.7 trillion to strengthen its fleet.(*)
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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.