8,000 state banks employees face dismissal

JAKARTA (JP): The government plans to dismiss some 8,000 of the 26,000 employees of four state banks to be merged into the newly established Bank Mandiri, the bank's president Robby Djohan said on Saturday.

Robby said the government would provide Rp 800 billion (US$94 million) in severance pay to compensate the 8,000 employees of Bank Dagang Negara, Bank Bumi Daya, Bank Exim and Bank Pembangunan Indonesia (Bapindo) facing dismissal.

"We only need 18,000 workers out of the 26,000," he said on the sidelines of a seminar on economy and technology held by the German-Indonesian Forum here.

Previously, the government had expected to dismiss over 10,000 employees from the four banks.

He made assurances that there would be enough money to finance the redundancy payments.

The merger process of the four banks into Bank Mandiri, set up last year to take over the four banks' assets, will be completed in two years.

Robby also said that the government expected to issue a regulation regarding the transfer of nonperforming assets of the four banks into the Asset Management Unit of the Indonesian Bank Restructuring Agency (IBRA) by Monday.

The government had initially planned to announce the transfer of the nonperforming loans to IBRA on Friday, but the announcement was delayed.

The government also delayed its plan to disclose on Saturday the private banks which are eligible to join the government- sponsored recapitalization program and those facing closure. The announcement will be made in two weeks.

Bank Indonesia Governor Sjahril Sabirin said that the number of banks which do not qualify for recapitalization and are therefore facing closure could reach about 40.

The newly formed Association of Banking and Finance Workers Union estimated early last week that at least 25,000 workers could be affected by the closures.

This figure excluded the employees of state banks, the association said.

It also estimated that dismissed managerial-level employees could live on their severance pay for 18 months, but lower-level workers would find their compensation adequate for only six months.

Last week, IBRA Chairman Glenn Yusuf said that nine banks had confirmed their commitment to acquire 500 branch offices, including some 10,000 employees of the insolvent banks, expected to be closed down in two weeks by the government.

Business opportunity

Meanwhile, business consultant Amir Karamoy called on the government to provide "business opportunity schemes" to help the thousands of employees in the banking and financial sectors facing job dismissal.

Amir, a senior consultant of the AK & Partners franchise consulting firm, said the move was urgent to anticipate a boom in the number of unemployed trained and skilled personnel.

"The business opportunity scheme is basically a business partnership between large, medium and small companies including cooperatives, or between individuals or groups of entrepreneurs," he said.

The scheme could be applied to franchise and nonfranchised businesses, he said.

"Those who lost their jobs could use their severance pay as capital to form franchisees, and with the help of their franchisers run new businesses."

They could also become involved in nonfranchised businesses on a range of levels: as distributor or dealer, business partner, multilevel marketing person, license holder of small retail chain, or run a "coin-operated business" such as a telecommunications kiosk.

The government could involve state firms like oil and gas company, Pertamina, or telecommunications operator PT Telkom to provide business opportunities as distributors, he suggested.

For example, Pertamina could provide schemes for people to distribute its oil and gas products, while Telkom could offer opportunities for people to invest in telecommunications kiosks or coin telephones in revenue-sharing schemes, he said.

"In the United States, similar business schemes have existed since the 1970s. Institutions such as the U.S. Federal Trade Commission and the Small Business Administration played a central role in their development," he said. (rei/das)