Mulyani, SBY at odds over Bumi trading

The Jakarta Post ,  Jakarta   |  Fri, 11/07/2008 10:57 AM  |  Headlines

The Indonesia Stock Exchange (IDX) on Thursday lifted its trading suspension on PT Bumi Resources, the Bakrie Group's most valuable firm, amid speculation the finance minister had protested to President Susilo Bambang Yudhoyono.

Finance Minister Sri Mulyani reportedly protested against the move overturning her decision to end the one-month halt on trading in Bumi, allegedly to help protect the interests of the Bakrie family.

Bumi shares plunged by 9.2 percent to Rp 1,975 after trading resumed, as investors sold to meet margin calls on the stock.

A margin call is an act in which brokers force the investor to either sell the stock or add more cash to their account.

As the drop neared the 10 percent threshold, Bumi's hammering was automatically paused by the IDX.

The queue of investors wanting to sell their shares in Bumi was the largest in IDX history, with some 1.91 billion shares, or 10.11 percent of Bumi's entire stake, being offered for sale.

A source at the Finance Ministry said the decision to lift the trading suspension was made after Mulyani met with the President at the Presidential Palace late Wednesday to protest against his decision to put the Bakrie firms' interest above that of the public.

"Mulyani was devastated by the interference of her bosses in the Bakrie problem," the source said.

Presidential spokesman Andi Mallarangeng on Wednesday denied Yudhoyono had intervened.

Mulyani refused to comment on the incident, including on speculation she had tendered her resignation that same night.

The IDX said Wednesday it would lift the Bumi suspension after hearing the explanation from parent firm PT Bakrie & Brothers about a deal to sell its 35 percent stake in Bumi to Northstar Pacific.

This decision is supported by Mulyani, whose ministry regulates the capital market.

However, an hour later the IDX reversed the decision following a request from the government. The bourse refused to identify which office demanded the suspension be maintained.

Capital Market and Financial Institution Supervisory Agency (Bapepam-LK) chairman Fuad Rahmani said the government had to reverse the decision to lift the suspension to protect the market.

"The lifting of the suspension was canceled because there was important information that we needed to clarify, or else it could have created a systemic adverse effect," Fuad said.

The IDX suspended trading in shares of Bakrie & Brothers, Bumi and PT Energi Mega Persada -- all part of the Bakrie Group of companies -- on Oct. 7, after their value fell sharply following reports Bakrie was having trouble paying debts.

Bakrie & Brothers, the nation's largest publicly listed investment firm, announced on Nov. 1 that Northstar, a local unit of U.S. buyout giant Texas Pacific Group, had agreed to pay US$1.3 billion for its 35 percent stake in Bumi.

Northstar, believed to be teaming up with state mining firms, must wrap up the deal within 28 days.

Analysts say lifting the suspension would have harmed the deal, with the Bumi stake expected to be heavily devalued as investors promptly sold their shares over worries their value could drop further because of continuing uncertainty over Bakrie's debt arrangements.

Help from the government will mean a lot for the Bakrie family, headed by Coordinating Minister for the People's Welfare Aburizal Bakrie, given its role as a key financier of Yudhoyono's 2004 presidential campaign.

Aburizal Bakrie's spokesman Lalu Mara Satriawangsa denied allegations the minister had asked the President, as a special favor, to cancel the decision to continue trading or grant any other protection for the family's business empire.

"Pak Ical (Aburizal Bakrie) is part of the government. He is focusing on his job. Anything related to Bumi is a corporate affair which has nothing to do with him," he said. (hwa)

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Anonymous (not verified) — Fri, 11/14/2008 - 2:16pm

Well, since I respected Mulyani as a honorable person, she deserved to be respected as anchor of financial policymaking and the other will have to follow her although her leader's opinion is contrast with hers. The top position of the country have to listen to her and take a move based on agreement between them and what best for the country.

Ping (not verified) — Thu, 11/13/2008 - 3:35pm

I think the problem may be the media. Before SBY becomes the president he was touted as the one who can bring Indonesia out of the crisis we were having. This created great expectations (and pressure) on SBY, which any man knew they are impossible to achieve within 5 short years.

So he hasn't achieved much. So we become disenchanted, and lose faith in him. But keep in mind SBY has a lot in his plate already: all the natural disasters, soaring oil prices, economic recession... I still believe he's the best man for the presidential job.

And Mbak Sri Mulyani as the president... Maybe not, yet. I mean just because she's the best Finance Minister we ever had doesn't mean she'll make a good president. It takes a lot to become one, not just sound economic practices and a good personality.

Dalin (not verified) — Sat, 11/08/2008 - 11:45am

This is the political obligation, the cases will happen and happen again. As evidence that the president has no independent outlook of economic aspects.

Allison (not verified) — Sat, 11/08/2008 - 8:43am

the last time I checked, the U.S. government made a 700-billion dollar bailout for ailing finance industry.

Ayuna (not verified) — Sat, 11/08/2008 - 8:38am

when I voted for Megawati, she won the presidency..when I voted for SBY, he won the presidency. Problem now is I don't know who to vote next year. If Sri Mulyani wants to be a presidential candidate, maybe I will vote for her!!

Mark gibbs (not verified) — Sat, 11/08/2008 - 8:36am

Bakrie will finance SBY's re-election, as he financed SBY in the past. This is the only reason to bail out his businesses. The truth is that Bakrie should have resigned a long time ago. As Minister for People's Welfare, he is possibly the world's biggest fraud. His company is directly responsible for untold misery and suffering following the mud volcano. And that was caused by his staff cutting corners to increase profits....a trait inherited from the leadership of the company - Bakrie himself. Most other countries in the world - save North Korea or Iran - would not allow such a vagrant conflict of interest in the government. But they have contempt for their own populations - presumably, as does the Indonesian government.

Lemi4 (not verified) — Sat, 11/08/2008 - 8:12am

Me personally -- if I had the cash -- I would buy as many Bumi stocks as I possibly can. Bumi stocks will only get cheaper and Northstar will have to buy as much of them as they can in less than 28 days.

So, anyone want to short-sell Bumi against me? ;) Or, if you're willing to loan me some funds, I'll give you 20% of net profits ;)

Borobudur — Sat, 11/08/2008 - 7:16am

In this case, lifting the suspension on the group of Bakrie shares, I am afraid, does encourage unnecessary carnage and negative knock on effects on the whole IDX and economy. It would be more desirable to negotiate and settle a large transfer of Bakrie's stake outside of the market arena. The most important consideration in such an operation is the Price of the stake. If it is priced too high, it would appear obvious that State funds are used to save the Bakries. The free market would at this moment irrationally priced the stake at its lowest possible, which again, could hardly be called a Fair deal. Probably, engaging a few outside global consortium to participate in the stake transfer, in addition to Indonesian and State entities, is one of the way to ensure a Fair market Price.

Mohamad Ramadan (not verified) — Fri, 11/07/2008 - 10:31pm

It's Stark and Obvious, Indonesian Politician and Elite do not play by the rule. They twist and bent the rules to enrich themselves at the expense of the Nation and its Citizen, whom they "claim" to serve. Poor innocent Citizens of RI may never know that they have been robbed!!!!

Jose Dinoy (not verified) — Fri, 11/07/2008 - 3:11pm

Finance Minister Sri Mulyani's only honourable thing to do is to resign.

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