Bambang faults int'l bankers for unplanned lending

Bambang faults int'l bankers for unplanned lending

WASHINGTON (Agencies): Bankers and investors around the world share the blame for Indonesia's financial crisis because they based investment decisions on market sentiment without enough information to fairly assess risks, Indonesia's finance minister told a meeting of global bankers Sunday.

Citing a classic American western starring Clint Eastwood, Lee Van Cleef and Eli Wallach, Bambang Subianto faulted foreign and domestic banks and investors in Indonesia for failing to "distinguish between `The Good, the Bad and the Ugly'."

"Our banking system is weak and the supervision is also insufficient," Bambang told bankers attending the annual meetings of the Institute of International Finance.

However, "it takes two to tango," Bambang was quoted as saying by Bloomberg, faulting foreign investors for pouring money into markets and ventures they had no way of fully understanding.

"Private sector decision-makers must be provided with sufficient means to make prudent and objective decisions," Bambang told the group, which includes most of the world's largest banks including Bank of Tokyo-Mitsubishi Ltd. of Japan, Deutsche Bank AG of Germany and Citibank and Chase Manhattan Bank of the U.S. as well as major insurers and mutual fund groups.

Yet in many countries, including Indonesia, the lack of information meant investors made decisions "more on the basis of market sentiment and less on objective information," Bambang said.

"Therefore I propose an international system that would allow the pooling ... of data systems that would provide needed information accessible to any investors," he said.

Bambang didn't elaborate on the structure, management or methodology of such a system.

Japan's initiative

Bambang also said Sunday that a Japanese proposal to support other Asian countries with facilities worth as much as US$30 billion should be copied by other world financial powers.

Bambang said "perhaps that is the kind of initiative we would like to see not only from Japan but other countries," Dow Jones reported.

In a speech on the sidelines of the International Monetary Fund-World Bank meeting, the official said the so-called "New Miyazawa Initiative" is important because it goes beyond offering financial support and provides measures of non-financial support.

The money, half for the longer-term and half for short and medium term support will be aimed at a number of areas, said the Japanese finance ministry in a statement on Saturday.

Bambang said pre-crisis figures showed that Indonesia was a very inefficient place to do business, with manufacturing costs 50 percent higher than in Malaysia and 75 percent above those in Singapore based on one measure.

He said those kinds of figures show that the country needs to do something about rooting out corruption and "we understand that confidence is very important," but he urged a response that tempers "emotion" and noted that past efforts to trace corruption in Indonesia have shown how difficult it is to get the money back.

"It is not easy to get access to the assets. Perhaps it will take some time," he said.

Meanwhile, the country's central banker Sjahril Sabirin said that "there is a sign of recovery, we see the light at the end of the very rough tunnel." He noted that inflation is moderating and interest rates are edging lower.

The officials reiterated that the government will stick with the IMF program.

When asked about Malaysia's capital controls. "We have our plan and our program. We are going to stick with our plan and our program," said Bambang.