The Indonesian government is considering raising its stake in PT Indosat, the country's second- largest telecommunication firm, by buying back shares it sold in 2002 to Singapore Technologies Telemedia (STT).

Vice President Jusuf Kalla has confirmed the plan, saying it formed part of the efforts to boost the government's ownership of strategic state enterprises, including Indosat, The Jakarta Post reported Friday.

"I haven't heard any plans from STT to raise its stake in Indosat. On the contrary, the government is now calculating (its resources) should the foreign owner (STT) in the company sell its stake," Kalla was quoted as saying.

"If there is such a possibility, the government expects to be able to enlarge its ownership in the company," he said.

Kalla, a wealthy businessman, is known for his pro-nationalist views on business ownership.

The plan may raise some eyebrows since the source of the funds for the buy-back is unclear, especially when the state budget is already overstretched.

With the higher cost of the fuel subsidy, it is estimated that the state budget deficit may jump to 1.3 percent of the gross domestic product (GDP) this year, or about 35.2 trillion rupiah ( 36.2 billion US dollars).

Initial projections for the deficit stood at 0.8 percent of GDP or about 20.3 trillion.

However, Kalla remained upbeat about the plan, saying "the government will explore several potential resources."

The previous administration under the leadership of Megawati Soekarnoputri sold 42 percent of government's stake in Indosat to STT for about 631 million dollars in 2002.

The government now has about 14.6 percent in the company, with public investors holding the remaining 43.4 percent.

Early this month, STT president and chief executive officer Lee Theng Kiat reiterated after a meeting with Kalla the company's long-term investment commitment in Indosat, and vowed to continue to develop its networks here.

Source: Xinhua