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Tue, Oct 07, 2003 - Page 12 News List

Indonesia hopes to attract foreigners with asset sales

BLOOMBERG

Indonesia will step up sales of state-owned hotels such as Ja-karta's Hotel Indonesia, as well as pharmaceutical and phone companies, officials said. It also wants investment ratings for more than 300 of its regions.

"I don't think the state should own very competitive sectors like hotels because it cannot compete with the Hiltons or Grand Hyatts," Laksamana Sukardi, Indonesian minister for state enterprises, said in a speech to business executives in Bali.

"Pharmaceuticals is another very competitive sector," he said. "The other is telecommunications, which requires continuous capital expenditure."

Indonesia needs to win back foreign investors and tourists after last year's Bali bombing.

Overseas investment approvals last year fell 35 percent to a nine-year low of US$9.7 billion.

Southeast Asia's biggest economy also needs to step up sales of state assets, many of them acquired after the 1997 Asian financial crisis, to help plug the government's US$4.1 billion budget deficit.

He didn't name the companies the government is planning to sell.

Singapore Telecommunications, the region's biggest phone com-pany, owns a 35 percent stake in the cellular phone service of state-owned PT Telekomunikasi Indone-sia. Last week, Singapore Telecom said it would be interested in gaining control of its overseas ventures.

The government also wants to build up its fledgling aircraft industry and will invite investments from other nations, Sukardi said.

PT Dirgantara Indonesia, the country's only state-owned aircraft manufacturer, has never made a profit since its inception in the 1970s. It is struggling to pay more than 3 trillion rupiah (US$357 million) it owes the Indonesian Bank Restructuring Agency.

The government had once mulled selling the company to foreign investors but held off a decision in the wake of internal opposition to the sale.

"We're inviting Malaysia, Brunei and Thailand to invest in our aircraft industry to broaden our leverage and our market," Sukardi said.

Meanwhile, the University of Indonesia is appraising the investment climate of 360 so-called regencies so investors can make better judgments about the risks and returns of investing in the country, Theo Toemion, chairman of the government's Investment Coordinating Board, said.

"We expect the first report early next year," Toemion said.

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