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Factions in the Indonesian Government are reportedly opposing the sale of the world's largest instant noodle-maker, Indofood Sukses Makmur, by the beleaguered Salim Group.

 They want the government to take over the company as repayment for a May bailout of Salim banking arm Bank Central Asia.

 The Liem Sioe Liong-controlled group owes the government more than US$500 million for the bailout.

 A joint venture between the Salim Group's Hong Kong-listed First Pacific and Japan's Nissin Food Products last month agreed to buy Salim's 60 per cent Indofood stake for $570 million. The government holds a 10.18 per cent Indofood stake.

 A state enterprises ministry official told yesterday's Bisnis Indonesia there was some opposition to the deal within the ministry.

 'Indofood is one of our national assets and the Salim Group has grown the company with government assistance. So if it is to be sold to foreign investors it is only for the benefit of the [Salim] Group,' the official said.

 It would be better if Indofood were taken over by the government in repayment for the liquidity credit extended to Bank Central Asia by the Indonesian central bank, he said.

 State Enterprises Minister Tanri Abeng told the newspaper the government would ask the management to explain the sale in detail at Indofood's next shareholder meeting on January 25.

 Mr Abeng said the government had not yet decided whether to give the deal its blessing.

 'As minority shareholder, the government has its rights in Indofood and cannot just be ignored,' he said.

 First Pacific spokesman Robert Sherbin said no Indonesian Government or Indofood minority shareholder approval would be needed for the deal to be concluded as scheduled on February 1, provided First Pacific minority shareholders first agreed to the creation of new shares.

 Approval from the Indonesian Government was, however, still needed to change Indofood's status from a local to a foreign-owned enterprise.

 'We do not feel that is a deal-threatening proposition, though,' Mr Sherbin said.

 The Indonesian central bank took control of Bank Central Asia - once Indonesia's largest private lender - in May last year, injecting more than 35 trillion rupiah (now about HK$35 billion) in fresh capital when depositors caused a run on the bank.

 In a settlement to regain control of the bank, the Salim Group agreed in September to transfer about 48 trillion rupiah of assets - including a 5 per cent stake in First Pacific - to an independent entity to begin repayment. The assets are not expected to be transferred until the middle of this year.

 Meanwhile, shares in First Pacific's Philippine subsidiary Metro Pacific rose for the second day yesterday, by 13.92 per cent to 1.80 pesos, on speculation of a pending alliance with rival Manila property developer Ayala Land on its Fort Bonifacio redevelopment project.



Indonesian officials baulk at foreign buy of stake in Indofood