Megawati asks IBRA to speed up asset sale<\/p>\n
JAKARTA (JP): Vice President Megawati Soekarnoputri has told
\nthe Indonesian Bank Restructuring Agency (IBRA) to speed up the
\nsale of various banking assets under its control, Finance
\nMinister Rizal Ramli said on Friday.<\/p>\n
Speaking to reporters following a Cabinet meeting chaired by
\nMegawati, Rizal said that the agency had so far only managed to
\nsell around 20 percent of the total assets under its management,
\nwhich are estimated to be worth around Rp 540 trillion (US$47.56
\nbillion).<\/p>\n
\"In the meantime, the value of the assets has been declining
\nsteadily,\" he said.<\/p>\n
Rizal added that the Vice President warned IBRA that it must
\ncomplete the asset disposal program before the government
\ndissolved the agency in 2004, as planned.<\/p>\n
IBRA, a unit under the finance ministry set up in 1998,
\nreceived various types of assets, including massive non-
\nperforming loans (NPLs) from the country's troubled banking
\nsector and former bank owners as repayment for debts owed to the
\ngovernment.<\/p>\n
The agency is mandated to restructure and sell the assets to
\nraise cash that will help finance the state budget deficit.<\/p>\n
The agency is expected to raise some Rp 27 trillion in cash
\nthis year to help finance the budget deficit, estimated to reach
\n3.7 percent of gross domestic product (GDP). So far, however, the
\nagency has only raised around Rp 8 trillion.<\/p>\n
The International Monetary Fund (IMF) has often criticized
\nIBRA's slow asset disposal. The IMF has said that the quick sale
\nof IBRA assets would help revive investor confidence in the
\neconomy.<\/p>\n
The agency was supposed to have already sold a majority of the
\ngovernment shareholding in publicly listed Bank Central Asia
\n(BCA) and Bank Niaga last year, but the plan was canceled citing
\nunfavorable market conditions.<\/p>\n
The delay prompted the IMF to also cancel the disbursement of
\na crucial loan tranche to the country.<\/p>\n
IBRA is set to complete the sale of its BCA shares this month
\nand the Bank Niaga shares later this year.<\/p>\n
Analysts have said, however, that the restructuring of NPLs
\nand sale of assets under IBRA's control have been slow, partly as
\na result of strong political interference.<\/p>\n
One prominent case involved the recent sale of 25 palm oil
\nplantations to Malaysia's Kumpulan Guthrie Bhd. The deal nearly
\ncollapsed following massive criticism from legislators and
\ndomestic associations, who claimed that the deal was not in the
\nnation's interests.<\/p>\n
The deal was only made possible following high level political
\nlobbying.<\/p>\n
Elsewhere, Rizal said that the government was still studying
\nthe plan by IBRA to form joint ventures with foreign investors to
\nspeed up the restructuring of NPLs and the sale of restructured
\nloans. (rei)<\/p>",
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