Shake-up at IBRA<\/p>\n
Firing the second-highest executive of the agency that holds
\nthe key to Indonesia's economic recovery while he was overseas
\nleading a road show to attract investors was the last thing
\nPresident Abdurrahman Wahid needed to do to improve the
\ncredibility of his economic crisis-management system. The
\nPresident's abrupt decision last week to replace Arwin Rasyid as
\nvice chairman of the Indonesian Bank Restructuring Agency will
\nonly strengthen the market's perception that his management
\nsystem is erratic, at best.<\/p>\n
The timing and unclear reasons for the dismissal of Arwin
\nafter only about 10 months in his position, and strong rumors of
\nthe imminent replacement of Cacuk Sudarijanto as IBRA chairman,
\nthough weakly denied by the President's spokesman Wimar Witoelar
\non Monday, will only cause more damage to the working spirit at
\nthe agency.<\/p>\n
We thought the political struggle for control of IBRA, which
\nholds more than Rp 600 trillion (US$68.2 billion) in state
\nassets, or as much as 40 percent of gross domestic product, ended
\nwhen Abdurrahman moved last November to make the agency
\nanswerable only to him. But the top management at IBRA seems to
\nremain highly vulnerable to squabbles within the political elite.<\/p>\n
Bambang Subianto, the first chairman of the agency that was
\nset up by then president Soeharto in late January 1998, served
\nfor only about two months. Bambang Subianto's successor, Iwan R.
\nPrawiranata, survived for approximately three months. The third
\nchairman, Glenn M. Yusuf, served the longest tenure, weathering a
\nturbulent 18 months. Cacuk, whose status is now highly uncertain,
\nwas appointed only last December.<\/p>\n
Such instability and discontinuity in the top management is
\ndevastating to the capability of the agency to carry out its
\nvital role of helping to lead the nation out of the economic
\ncrisis.<\/p>\n
IBRA's tasks of salvaging the banking industry, resolving the
\nhuge corporate debt overhang and restructuring the paralyzed
\nbusiness sector requires not only strong leadership, but also
\nsome sort of continuity in management. Debt restructuring is a
\ncomplex, time-consuming process.<\/p>\n
How can IBRA management develop strong leadership if its key
\nexecutives can be replaced anytime, without clear reason? If this
\ntendency continues, key officials, who by the nature of their
\njobs will always face temptations from big debtors to \"collude or
\ncorrupt\", could opt for the easy way out, acting in very short-
\nterm interests at the expense of the national economy.<\/p>\n
True, IBRA's performance is still way below expectations. Its
\nbank and debt restructuring programs have always been far behind
\nschedule and its asset recovery has always been far short of the
\ntargets. Its latest debt restructuring deals, involving more than
\n$3.7 billion owed by four conglomerates, exploded into a
\ncontroversy that spooked the international market and
\nmultilateral agencies, and could become a hot potato for
\nIndonesia's delegation at the meeting of the Consultative Group
\non Indonesia creditor consortium in Tokyo beginning on Tuesday.<\/p>\n
It is, however, not fair to pin all of the blame for this
\nsubpar performance on IBRA management. In addition to the
\ninstability of its management in the first seven months of its
\noperations, the agency has been held hostage to political battles
\nbetween various influential groups.<\/p>\n
Abdurrahman's move to put IBRA directly under his control was
\ninitially hailed as the right step to protect the agency from
\nvested political interests and to gradually develop it into an
\nindependent institution, able to perform freely its functions.
\nBut the President's latest tinkering with its top management once
\nagain proves how chaotic has been Abdurrahman's economic-
\nmanagement system.<\/p>\n
Letting IBRA drift much longer will derail the nascent
\neconomic recovery. It is therefore imperative that the House of
\nRepresentatives ask for the government's accountability regarding
\nthe agency. We are also utterly disappointed with the Oversight
\nCommittee of IBRA, which seems to serve only as a perfunctory
\nbody. The committee, consisting of independent experts under the
\nleadership of Mar'ie Muhammad, a former finance minister who was
\nknown as \"Mr. Clean\" during the corrupt Soeharto regime, should
\nbe more assertive in exercising its authority, acting quickly and
\nfirmly to enforce the long-delayed good governance system at the
\nagency.<\/p>",
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"sponsor": "Okusi Associates",
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