DPR may grill FSPC, IBRA over debt extension scheme<\/p>\n
Berni K. Moestafa, The Jakarta Post, Jakarta<\/p>\n
Legislators are set to grill the Financial Sector Policy
\nCommittee (FSPC), and the Indonesian Bank Restructuring Agency
\n(IBRA) over their controversial decision to extend a debt payment
\nscheme for IBRA's uncooperative debtors.<\/p>\n
Vice chairman of the House of Representatives' Commission IX,
\nwhich oversees financial affairs, Faisal Baasir said the decision
\nsmacked of injustice, and demanded the FSPC and IBRA explain
\ntheir decision.<\/p>\n
\"There have been talks among commission IX members, urging for
\nan immediate hearing with the FSPC and IBRA,\" he told The Jakarta
\nPost.<\/p>\n
The powerful FSPC is in charge of IBRA's high profile debt
\nrestructuring deals, and comprises top economic ministers.<\/p>\n
\"This issue will be brought up in our first meeting when we
\ndiscuss the commission's agenda for this year,\" Faisal added.<\/p>\n
Last month, the FSPC approved the payment extension of the
\nshareholders settlement program to 10 years from four.<\/p>\n
Under the program, former bank owners, whose banks IBRA took
\nover, agreed to repay their debts coming mainly from unpaid
\nliquidity support loans that the government disbursed to banks at
\nthe height of the 1997 financial crisis.<\/p>\n
The 1998 shareholders settlement program is an umbrella
\nagreement for various debt deals such as the Master of Settlement
\nand Acquisition Agreement (MSAA), and its newer version the Deed
\nof Indebtedness (APU).<\/p>\n
Three years since the program came into effect, most debtors
\nhave not even started debt payment let alone settled their debts.<\/p>\n
They argued that lingering adverse economic conditions made it
\nimpossible to repay all their debts within four years.<\/p>\n
The former bank owners also questioned why other IBRA debtors
\nwere allowed long payment terms of some 10 years, while theirs
\nwere fixed at four.<\/p>\n
Ongoing talks with the former bankers failed to yield results.<\/p>\n
As 2002 marks the last year of the program, IBRA decided to
\nextend the payment period to 10 years with the approval of the
\nFSPC.<\/p>\n
This drew public criticism, spearheaded by bank analysts who
\nquestion the incentives given to uncooperative debtors.<\/p>\n
The decision came late December without public notice, and on
\nthe same day FSPC announced its 2001 working report without
\nmentioning the last controversial ruling.<\/p>\n
IBRA chief I Putu Gede Ary Suta argued that an extension would
\nkick start debt payments, and warned that otherwise the
\ngovernment may never see its money back.<\/p>\n
\"What is the guarantee that debtors will start paying once the
\nprogram is extended?\" asked Lin Che Wei, regional bank analyst
\nand director of Singapore-based SG Securities.<\/p>\n
IBRA head of asset disposal, Dasa Sutantio said the agency did
\nconsider taking legal action against the uncooperative debtors,
\nbut was then unsure whether such a move would yield results.<\/p>\n
According to him, a commercial solution similar to that
\nextended to other IBRA debtors is more realistic.<\/p>\n
That, however, also implies the government doubts the
\neffectiveness of its own legal system.<\/p>\n
Che Wei said that since almost all were uncooperative debtors
\nrefusing to even start paying, their lack of good will should be
\nclear by now.<\/p>\n
\"They (debtors) must do their part of the bargain, then we'll
\ndo ours, but not the other way around,\" he said.<\/p>\n
\"Or we end up in the same situation 10 years from now ...
\nthis is running from reality.\"<\/p>\n
IBRA argued the 10 year extension was already negotiated
\ndownwards from the 12 years proposed by consultancy firm Deloitte
\n& Touche, which had represented former banker, Sjamsul Nursalim.<\/p>\n
But in earlier talks with IBRA, Deloitte had proposed only an
\neight year extension, casting doubts on IBRA's negotiation
\nskills.<\/p>\n
Che Wei added that the debt extension approval was unfair in
\nthe face of the government's move to hike fuel and power prices.<\/p>\n
The interest rates on state bonds that funded the banks' bail
\nout remains a burden on the state budget. The energy subsidy
\nsaved from the increase in fuel prices would pay for the interest
\nrates.<\/p>\n
However, Che Wei questioned why the burden of the higher fuel
\nprices was placed on the public while the debtors were given a
\nfurther grace period.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/dpr-may-grill-fspc-ibra-over-debt-extension-scheme-1447893297",
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