- Government plans to begin divesting state-owned stakes next year
- Airports, seaports, healthcare likely first privatisation sectors
- Danantara mulling Panda bonds, Dim Sum bonds, 30-year Eurobond
LONDON, Nov 6 (Reuters) - Indonesia is accelerating reforms aimed at addressing the equity market concerns that prompted index provider MSCI to threaten its emerging-market status and remove it from indexes tracked by funds, Investment Minister Rosan Roeslani told Reuters.
MSCI froze some index changes over opaque share ownership and suspected coordinated trading, warning in October it could relegate Southeast Asia's largest economy to "standalone market" status, potentially prompting investor outflows.
The MSCI announcement triggered the steepest one-day fall in Indonesian stocks in 28 years.
In an interview with Reuters, Rosan said authorities had made progress on free float and the disclosure of holdings above 1% but more work was needed on enforcement and concentrated stocks.
"We are continuing to improve our capital market, and hopefully we can accelerate this improvement," he said, adding that Indonesian authorities were meeting regularly with MSCI.
"We just try our best, try to work with MSCI, because I know it's the best for all of us," he said.
The government's reform efforts, which were launched before MSCI issued its warning but have since been significantly stepped up, come as Indonesia is also seeking more private investment in state assets through privatisation.
Rosan said the government planned to begin divesting stakes in state-owned entities next year, through IPOs or private placements. Airports, seaports and healthcare, which piqued the most investor interest, are likely to go first, he added.
"We have a choice to do the privatisation on the holding level or the operational level directly, or both," he said, declining to give further details.
"We are very open to find a lot of different structure(s) when we do the privatisation in the coming years."
WEALTH FUND STRATEGY: MORE INVESTMENTS, MORE BOND ISSUES
Rosan, who also heads Indonesia's sovereign wealth fund Danantara, said it planned to open offices in New York and Hong Kong.
"There are a lot of investors there, and they are hubs for financial instruments. Also, at the same time, we are looking at operational opportunities," he said.
The fund also plans a Saudi office after buying land and hotels in the Muslim holy city of Mecca to serve Indonesians participating in the annual Hajj pilgrimage.
Rosan said Danantara's planned investments next year could surpass this year's estimated $14 billion to take advantage of the variety of "under-pressure ... and undervalued" assets, though he declined to name specific opportunities.
He added that he expected that the fund's domestic to international investment ratio — currently a roughly 80% to 20% split — could eventually shift to 60% to 40%.
Danantara could also issue more debt after its debut $1.5 billion Eurobond in June, if market conditions and yields are favourable, Rosan said. Options include Panda and Dim Sum bonds and a 30-year Eurobond — or a combination.
"We are open to have a 30-year bond also, because there is also the appetite for us, based on the investor feedback ... So we might do it also in the future," he said.
Reporting by Karin Strohecker; Editing by Joe Bavier
Source: Reuters