IBRA's poor peformance hurts confidence: Bank<\/p>\n
Dadan Wijaksana, The Jakarta Post, Jakarta<\/p>\n
As in the last two years, investment will remain hard to come by
\nthis year, according to Citigroup Asset Management, partly due to
\nthe lack of credibility in the government privatization program
\nand the sale of assets under the Indonesian Bank Restructuring
\nAgency (IBRA).<\/p>\n
Vice president of Citicorp Investment Bank (Singapore) Ltd.
\nEdwin Chungunco said on Wednesday that the slow progress in both
\nprograms had created uncertainty and raised the risk of making
\ninvestment in the country.<\/p>\n
\"They're not convinced that IBRA is doing its job properly.
\nInvestors worry about the high risks they might face when
\nentering the Indonesian market,\" he said.<\/p>\n
\"FDI (foreign direct investment) will flow quite low this
\nyear, unless IBRA can do something about it,\" he added.<\/p>\n
IBRA is mandated to sell assets it took over from troubled
\nbanks in 1998 to raise cash to help finance the state budget
\ndeficit. But some of the asset sales have been mired in
\ncontroversy. One such example is the sale of carmaker PT
\nIndomobil Sukses Makmur late last year to a consortium-led by Tri
\nMegah Securities. There have been allegations that former owner
\nSalim Group was behind the transaction. The government has barred
\nthe Salim Group from repurchasing its assets from IBRA. The
\ncountry's antimonopoly watchdog (KPPU) is currently investigating
\nthe transaction with a possibility of issuing a recommendation to
\ncancel the deal.<\/p>\n
The agency is currently in the process of finalizing the sale
\nof the government majority stake in Bank Central Asia (BCA). But
\none of the bidders, U.S.-based Farallon Investment, had
\nthreatened to pull out from the bid amid concern of unfair
\npractice in the tender process. There have been accusations that
\nIBRA is favoring a certain bidder.<\/p>\n
A successful sale is crucial to prove that the government is
\nserious in implementing the economic reform program. The sale
\nprocess itself has been delayed several times partly due to
\nmeddling politicians.<\/p>\n
The government privatization program suffered a serious blow
\nlate last year when the sale of a majority stake in cement maker
\nPT Semen Gresik was blocked by employees and local politicians.<\/p>\n
With investment out of favor, the country's economic growth
\nthis year would rely on strong domestic consumption.<\/p>\n
High consumer spending was the prime mover of the country's
\ngrowth last year amid drops in investment and exports.<\/p>\n
Chungunco, however, was of the opinion that this year,
\ndomestic consumption would take a back seat to exports, which
\nwould start to pick up in the second semester of the year, in
\nline with the expected quick recovery of the global economy, led
\nby the U.S.<\/p>\n
The U.S. is Indonesia's main export destination.<\/p>\n
The government has targeted the economy to grow by 4 percent
\nthis year on the back of strong domestic consumption. But
\nCitigroup had a lower growth forecast of 2.9 percent.<\/p>",
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