IBRA to be closed next year<\/p>\n
Fabiola Desy Unidjaja and Dadan Wijaksana, The Jakarta Post,
\nJakarta<\/p>\n
The government will close down the Indonesian Bank
\nRestructuring Agency (IBRA) on Feb. 27 next year as scheduled,
\nalthough the agency has yet to complete the difficult task of
\nforcing big debtors to repay the state.<\/p>\n
\"A limited Cabinet meeting decided that the term of duty of
\nIBRA remains as scheduled. So at the end of February next year,
\nits task will end,\" Coordinating Minister for the Economy
\nDorodjatun Kuntjoro-Jakti told reporters after the meeting.<\/p>\n
He said the Cabinet had ordered the National Police and the
\nAttorney General's Office to prepare for a legal battle against
\nthe bad debtors.<\/p>\n
Dorodjatun added that the government would speed up plans to
\nset up a deposit insurance scheme to replace the existing
\ngovernment blanket guarantee scheme being handled by IBRA. Under
\nthe latter program, the government guarantees all obligations of
\nclosed down banks.<\/p>\n
IBRA's remaining assets will be transferred to new holding
\ncompanies. Dorodjatun said the Cabinet would meet again in
\nJanuary to work out the details of this plan.<\/p>\n
IBRA was set up in early 1998 with a five-year term and tasked
\nto clean up the country's messy banking sector, which was saddled
\nwith huge bad debts following the 1997 financial crisis.<\/p>\n
The agency took over some US$60 billion worth of assets from
\nfailed or ailing banks. It is mandated to restructure and sell
\nthe assets, in the form of bank nonperforming loans and fixed
\nassets surrendered by indebted former bank owners, to raise cash
\nto help finance the state budget, which is heavily burdened by
\nthe huge cost of bailing out troubled banks.<\/p>\n
IBRA, which has been led by seven different chairmen, has
\noften faced strong criticism from the public for issuing
\ncontroversial policies that appear to benefit big debtors.<\/p>\n
The debtors included businesspeople with huge bad debts and
\nformer bank owners accused of violating banking regulations by
\nchanneling most of their banks' money to their own businesses and
\nmisusing government bailout funds at the expense of taxpayers.<\/p>\n
Among the controversial policies were freeing some former bank
\nowners from their past banking crimes and selling assets at huge
\ndiscounts, which some critics said allowed the former owners of
\nthe assets to repurchase them at big discounts.<\/p>\n
Some analysts have said that there must be a mechanism to make
\nall IBRA top officials accountable for their policies.<\/p>\n
But IBRA chairman Syafruddin Temenggung said that the agency
\nhad done its best to execute its mandated tasks.<\/p>\n
He said the agency had posted a respectable recovery rate of
\n28 percent for the assets under its control, which was higher
\nthan the recovery rates of similar agencies in countries such as
\nChina (8 percent) and Thailand and South Korea (about 25
\npercent).<\/p>\n
He also said the country's banking sector had been
\nrestructured and all the banks were healthy, with some having
\nbeen even divested.<\/p>\n
The agency has so far sold majority stakes in Bank Central
\nAsia (BCA), Bank Danamon, Bank Niaga and Bank Internasional
\nIndonesia (BII), and plans to wrap up the sale of controlling
\nstakes in Bank Lippo and Bank Permata early next year.<\/p>\n
List of IBRA's unfinished businesses<\/p>\n
1. Still holds a minority ownerships in BCA, Danamon, Niaga, BII
\nand other banks. A holding company is expected to be established
\nto manage and sell these assets.<\/p>\n
2. About Rp 43 trillion worth of bad loan assets, the majority of
\nwhich come from five companies -- textile giant Texmaco (Rp 27
\ntrillion), aircraft maker Dirgantara Indonesia (Rp 2 trillion),
\nBali Nirwana Resort (Rp 2 trillion), Tirtamas Group (Rp 3
\ntrillion), Dipasena (Rp 4 trillion) -- are still unsold. A
\nholding company is also expected to be established to manage
\nthese assets.<\/p>\n
3. Of the 39 former bankers who agreed to settle their debts
\nthrough various schemes (MSAA, MRNIA, APU), nine have been
\ndeclared uncooperative and reported to the courts.<\/p>",
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"sponsor": "Okusi Associates",
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