Reforming Indonesia<\/p>\n
Indonesia's President Megawati Soekarnoputri is exceeding
\nexpectations left and right. Last week she awarded the most
\nimportant positions in her cabinet to well-respected technocrats,
\ndoling out lesser posts to her coalition partners, and the
\nmarkets gave their nod of approval. Earlier she expanded the
\nscope of a human rights tribunal, sending a strong signal to the
\nmilitary that efforts to hold it accountable for abuses in Timor
\nand elsewhere will continue under her administration. Yesterday
\nshe was back for more applause, giving reformist State
\nEnterprises Minister Laksamana Sukardi oversight responsibility
\nfor the Indonesian Bank Restructuring Agency.<\/p>\n
It's not an exaggeration to say that Indonesia's economic
\nrecovery depends on the management of IBRA. The agency
\nrecapitalized the country's banks in 1998 by taking over 600
\ntrillion rupiah ($66 billion at today's exchange rate) in bad
\nloans, and demanded collateral from the country's debt-strapped
\ncompanies. Those assets were supposed to be sold off quickly in
\norder to plug the hole in the central government's finances. But
\nduring the 21-month tenure of President Abdurrahman Wahid, IBRA
\nmade limited progress on this assignment. As a result much of the
\neconomy is still in a kind of limbo.<\/p>\n
Part of the problem was that some companies used every means,
\nlegal and otherwise, to drag out the process. But right from the
\nbeginning there was also political interference in IBRA's work,
\nand that allowed some companies to get better deals than others.
\nMr. Wahid bore ultimate responsibility for this state of affairs,
\nand it was one of the many reasons Indonesians lost respect for
\nhis leadership. It's imperative that Ms. Megawati start out on
\nthe right foot with IBRA.<\/p>\n
Choosing Mr. Laksamana is a good way to do so. He was once
\naptly described in a U.S. Embassy report as "the champion of
\nIndonesia's efforts to craft reforms needed to restore investor
\nconfidence." As part of President Wahid's coalition government,
\nhe started out serving as minister of investment and state
\nenterprises, so he has the benefit of hindsight as he takes up
\nthe job for a second time. More importantly, he has long been one
\nof Ms. Megawati's most trusted economic advisers, and strong
\npolitical backing is exactly what IBRA needs if it is to crack
\nthe whip on Indonesia's deadbeat tycoons.<\/p>\n
And it's Mr. Laksamana's track record of doing just that which
\nmakes his appointment an important signal to the debtors. His
\ncareer has been a good indicator of the state of Indonesia's
\nreforms. In late 1999 he argued that "shock therapy" was needed
\nto change the country's culture of corruption, and showed his
\nmettle by accusing the Indonesian conglomerate Texmaco of
\ncorruption during the Suharto era, an allegation the company
\ndenies.<\/p>\n
However, after just six months Mr. Laksamana lost his cabinet
\npost, and Texmaco's founder, Marimutu Sinivasan, lobbied
\nPresident Wahid and other politicians for support. The attorney
\ngeneral dropped an investigation of the company, and President
\nWahid defended Texmaco. Last September, IBRA cut a deal that
\nallowed the conglomerate to stay intact. The company has become
\none of several notable cases which typify IBRA's failure to put
\npotentially productive companies into the hands of those who are
\nwilling to bid the most for them, rather than those who ran them
\ninto the ground.<\/p>\n
Using his parliament seat as a pulpit, Mr. Laksamana kept up a
\nsteady stream of criticism of the government for failing to make
\nheadway in forcing out Mr. Sinivasan, whom IBRA's chairman called
\nthe "soul of the company." Mr. Laksamana condemned last year's
\ndebt workout deal, which gave Texmaco's founder a role in
\nmanagement and 12 years to pay back $2.7 billion in order to
\nregain majority control, as "daylight robbery."<\/p>\n
How strictly the new administration holds Texmaco and other
\ncompanies like it to their commitments will be an important early
\ntest of the new administration, and by giving Mr. Laksamana power
\nover the process there can be no doubt what President Megawati's
\nintentions are. While it's too soon to say that she is going to
\nsucceed where Mr. Wahid failed, there have been some encouraging
\nsigns that have many Indonesia observers pleasantly surprised.<\/p>\n
-- The Asian Wall Street Journal, Hong Kong<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/reforming-indonesia-1447893297", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }