BI governor Soedradjad replaced

BI governor Soedradjad replaced

JAKARTA (JP): President Soeharto has removed Soedradjad
Djiwandono from his post as central bank governor and appointed
Sjahril Sabirin, a long time Bank Indonesia career officer, in
his place, Minister/State Secretary Moerdiono said yesterday.

Sjahril, 54, had served as a director of the bank since
December after returning from a three-year stint as a World Bank
senior economist in Washington.

Like Soedradjad, he will carry a ministerial rank.

He will be installed by Soeharto tomorrow.

Soedradjad's replacement had been widely rumored for the past
week amid controversy over the government's plan to adopt the
currency board system (CBS) to shore up the ailing rupiah's
exchange rate.

When asked about the reason for the change, Moerdiono told
reporters in his office that Soedradjad's term had been due to
end, along with the other members of the cabinet, on March 1 when
Soeharto completed his five-year term as president.

"That's why the change," Moerdiono said, refusing to be drawn
into further questions on the reason for the removal.

Soeharto summoned Soedradjad to his Jl. Cendana residence
yesterday morning, apparently to inform him of the decision.

But when reporters asked afterwards whether he had tendered
his resignation, Soedradjad simply retorted: "No, no."

The official announcement came later in the afternoon.

"The President expressed his highest gratitude for
Djiwandono's services and he (the President) acknowledged that
the tasks had been very tough," Moerdiono said.

Soedradjad, he added, had been given an honorary discharge.

When asked whether the President had another assignment for
the former BI chief, Moerdiono said: "I don't know if the
President has another task for my colleague, but during my
conversation with him, Soedradjad said he wanted to dedicate
himself to the academic world."

There had been unsubstantiated rumors these past few months
that Soedradjad, an economics professor, had tendered his
resignation or was planning to.

When Soeharto replaced four Bank Indonesia directors at the
peak of the monetary crisis in December, many analysts believed
that Soedradjad's days were numbered.

Three of the former directors are now under police
investigation on suspicion of irregular activities at the bank.

Soedradjad and his directors came under strong criticism for
closing 16 ailing commercial banks on Nov. 1, a drastic move seen
as fulfilling a term set by the International Monetary Fund in
return for a US$43-billion-loan package it arranged for
Indonesia.

Soeharto's decree removing Soedradjad was signed Feb. 11 but
the decision was only made public yesterday. Informed sources
said the delay was made to allow Soedradjad host and preside over
a meeting of Southeast Asian central bankers in Bali last weekend
to discuss the monetary crisis affecting the region.

In spite of the strong rumors these past weeks, yesterday's
announcement still came as a surprise to analysts who feared the
impact it would have on the market.

"I think the market has sensed it (the dismissal) over the
past two weeks," an economist with a local securities company
said.

Economists and analysts, who asked for anonymity, said they
viewed Soedradjad Djiwandono as a capable and competent governor.

"The market and the world knows the capabilities of Soedradjad
Djiwandono," an economist said, adding that the untimely change
could further undermine the market's confidence in the rupiah.

Some analysts believed the change was connected to the
government's insistence to adopt the currency board system (CBS)
of pegging the rupiah to a fixed exchange rate.

Soedradjad was careful in not letting the public know of his
attitude towards the CBS, now being studied by Bank Indonesia.

But in an interview with a foreign reporter last week, he said
he was not part of the bank's team to study the concept.

Team

His successor, Sjahril, is in the team reviewing the law on
the central bank, which is expected to incorporate the CBS idea.

Sjahril, one of four new directors appointed to Bank Indonesia
to fill in the places vacated in December, was summoned by
Moerdiono to the State Secretariat office yesterday afternoon to
be informed of his new appointment.

Later, when asked by reporters on his appointment, he said:
"First of all, I have to thank God for the trust given to me to
take this job. Secondly, I know this is a very difficult task,
but I will endeavor, with the help of the entire staff at Bank
Indonesia, to carry out the job as best as possible."

He refused to comment further on his new assignment, or on the
CBS debate.

Born in Bukittinggi, West Sumatra, in 1943, Sjahril had served
as Bank Indonesia's director for foreign exchange and human
resources from 1988 to 1993.

He went to work for the World Bank for the next three years
and, on returning in December, was asked to work for Bank
Indonesia again, this time as director for human resources, money
supply and accounting.

A graduate of the Gadjah Mada University in Yogyakarta, he
joined Bank Indonesia in 1969 and has since seen his career rise.

When asked to comment on the deteriorating image of Bank
Indonesia because of the present monetary crisis, Sjahril said:
"As someone who was born at Bank Indonesia, I'm really saddened
at the public impression of the central bank. I know very well
that most BI staff are generally good.

"There may be one or two people who have made mistakes, but
this should not reflect on the other staff. I'm a BI officer, I
know the condition there very well."

Removing or reshuffling the cabinet in mid-term is rare for
President Soeharto but not unprecedented during his 30-year rule.

In February 1995, Ibrahim Hasan was removed as chairman of the
State Logistics Agency (Bulog), but he kept his post as state
minister for food affairs. In December 1995, Satrio Budiardjo
Joedono was removed as trade minister and his ministry was merged
with the ministry of industry. (prb/aly/emb)