IBRA's unstable leadership<\/p>\n
The sudden replacement on Monday of Edwin Gerungan after
\nserving only about seven months as the chief of the Indonesian
\nBank Restructuring Agency (IBRA) is simply further evidence of
\nthe erratic leadership of President Abdurrahman Wahid. Frequently
\nchanging the leadership of an institution with such an important
\nrole in helping lead the nation out of its now four-year old
\neconomic crisis defies all logic and is devoid of any common
\nsense. But then common sense and logic are not exactly among the
\nhallmarks of the beleaguered Abdurrahman administration.<\/p>\n
How can the 40-month old IBRA, which manages more than Rp 540
\ntrillion (US$54 billion) in state assets and is the nominee owner
\nof all the largest banks in the country perform well when its top
\nmanagement undergoes a shakeup almost every six months?. How can
\nthe agency maintain policy consistency and predictability, which
\nare vital to its dealing with investors and creditors?<\/p>\n
Such a drastic move would certainly affect the working morale
\nand team spirit within the agency because a change in the top
\nmanagement will usually be followed by shakeups among key members
\nof the working teams already nurtured by the previous leader.<\/p>\n
The market hailed the appointment of Edwin, an experienced
\nbanker of high integrity, as the fifth IBRA chairman last
\nNovember, believing that he possessed the courage to stand up
\nagainst intervention by vested political interests in day-to-day
\noperations.<\/p>\n
But Gerungan seemed to have often clashed with Finance
\nMinister Rizal Ramli when the latter was still the chief
\neconomics minister and head of the Financial Sector Policy
\nCommittee (FSPC), the governing board of IBRA. Their working
\nrelationship was made even less conducive because Edwin's
\nimmediate boss, the then finance minister Prijadi Praptosuhardjo
\n(dismissed on June 12), did not enjoy good rapport with Rizal.<\/p>\n
Edwin's days in IBRA were numbered when one of Rizal's
\nassistants at the FSPC revealed mid-last week that IBRA and the
\nprevious finance minister Prijadi had undermined the debt
\nrestructuring program by refusing to implement hundreds of deals
\nalready approved by the FSPC. Rizal implicitly announced a no-
\nconfidence vote in Edwin last Thursday when he asserted after a
\nmeeting with Vice President Megawati Soekarnoputri that IBRA
\nneeded changes to speed up its asset sales and debt restructuring
\nprocess.<\/p>\n
True, the economy will never achieve a strong foundation for a
\nsustainable growth unless IBRA completes its two most important
\nprograms.<\/p>\n
But one finds it hard to understand why almost four years
\nafter IBRA's establishment, the economic team of the Cabinet
\ncannot yet speak the same language in assessing the agency's
\nprograms. Whatever their reasons, the outright refusal by IBRA
\nand the previous finance minister to execute debt restructuring
\ndeals already decided is damaging to investors' and creditors'
\nconfidence in the agency. Any differences of views should have
\nbeen settled outright. Simply casting aside deals already agreed
\non was totally unprofessional.<\/p>\n
It goes without saying that the longer the Rp 280 trillion in
\nbad debts taken over by IBRA from closed and nationalized banks
\nremain unsettled or unrestructured, the worse would be the
\neconomy's bleeding as the debtor companies would remain
\ninaccessible to new credit lines. Likewise, the longer the Rp 260
\ntrillion worth of properties and ongoing companies remain under
\nIBRA management, the more likely it is that the companies would
\ndeteriorate.<\/p>\n
This will be the greatest challenge facing the new chairman
\nPutu Ary Suta, former chairman of the Capital Market Supervisory
\nAgency (Bapepam). An accountant by training, Putu is the first
\nchief of the agency without previous experience in the banking
\nindustry. But it was comforting to note his first statement after
\nhis installation on Monday afternoon where he pledged to
\naccelerate asset sales and debt restructuring.<\/p>\n
But Putu's tenure at IBRA might also end abruptly unless the
\ngovernment gives him clear-cut guidelines and sets clear
\nyardsticks to assess IBRA's performance. Without firm and
\npolitically-accepted guidelines for asset sales and debt
\nrestructuring, IBRA deals would always be vulnerable to public'
\nsuspicion of corruption, cronyism and collusion and to attacks
\nfrom the highly assertive House of Representatives.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/ibras-unstable-leadership-1447893297",
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"sponsor": "Okusi Associates",
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