Indonesia 'not ready' to privatize state banks in three years<\/p>\n
JAKARTA (JP): Indonesia won't be ready to privatize its state
\nbanks in three years time as demanded by the International
\nMonetary Fund, announced State Minister of the Empowerment of
\nState Enterprises Tanri Abeng.<\/p>\n
He said on Tuesday that the privatization of the ailing banks
\nshould be carried out within three to five years time to ensure
\nthat it would achieve the best market price.<\/p>\n
\"We have to be realistic with our capability,\" he told
\nreporters on the sidelines of a privatization seminar organized
\nby the Club of Journalists covering the President's Office.<\/p>\n
The country's seven state banks which include Bank Negara
\nIndonesia (BNI), Bank Rakyat Indonesia, Bank Bumi Daya, Bank
\nEkspor Impor Indonesia, Bank Tabungan Negara, Bank Dagang Negara
\nand Bank Pembangunan Indonesia have been mired in huge sums of
\nnon-performing loans (NPLs) caused partly by unsound,
\npolitically-directed lendings for well-connected business groups.<\/p>\n
The Indonesian Bank Restructuring Agency (IBRA) assumed over
\nRp 100 trillion in bad debts of the seven banks.<\/p>\n
Sorting out the bad debt mess has proven to be complicated as
\nIBRA has had to pass through political minefields set by the
\nwell-connected businessmen which are believed to owe the bulk of
\nthe NPLs.<\/p>\n
The IMF pressed the government to reach a restructuring
\nagreement with 20 of the largest debtors of the state banks as
\nsoon as possible or pursue bankruptcy proceedings against the
\nuncooperative debtors.<\/p>\n
Indonesia's new \"letter of intent\" to the IMF, which will be
\nissued this week, will include new targets for the restructuring
\nplans for the debtors.<\/p>\n
The IMF has been organizing a multibillion dollar cash bailout
\nfor the crisis-hit economy.<\/p>\n
But Tanri said that the targets set in the letter of intent
\ncould only be implemented if they're realistic.<\/p>\n
The restructuring of the debtors is expected to provide a
\nmomentum for the overall restructuring of the real sector, which
\nis essential for the country's economic recovery and to ensure
\nsuccess of the costly bank recapitalization program.<\/p>\n
But key economic ministers seem to be divided over how to
\nrestructure the debtors.<\/p>\n
Finance Minister Bambang Subianto insisted that the government
\nwouldn't want to swap the debts of ailing companies with
\ngovernment equity participation.<\/p>\n
Bambang also turned down a proposal to provide debt reduction,
\nunless the debtors could make a one-time debt repayment
\ntransaction.<\/p>\n
Other ministers seem eager to bail out the ailing companies
\nthrough government equity participation considering the
\nbusinesses are strategic to the country, employ a large number of
\npeople or are potential foreign exchange earners.<\/p>\n
The debtors seem to have won the first round of fights to
\nprevent their businesses being liquidated or their names being
\nannounced to the public.<\/p>\n
IBRA deputy chairman Eko S. Budianto said last week that the
\nagency had to return to the state banks the management of
\nindividual NPLs of less than Rp 25 billion.<\/p>\n
The banks earlier demanded the government to return all their
\nNPLs already transferred to the asset management unit of IBRA,
\narguing that they were better able to reach effective loan
\nworkouts with the debtors.<\/p>\n
But a government source said the IMF Asia Pacific director
\nHubert Neiss who came to Jakarta last week turned down a loan
\nwork strategy offered by Bank BNI and demanded the bank to make a
\nrevision. Bank BNI is one of the state banks with the largest
\namount of bad debts. (rei)<\/p>",
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