September 19, 2008 / 11:16 AM / 11 years ago

Indonesia parliament approves IPOs for state firms

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)

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