Burhanuddin new BI deputy chief

Burhanuddin new BI deputy chief

JAKARTA (JP): Bank Indonesia director of foreign affairs
Burhanuddin Abdullah has been appointed by House of
Representatives Commission IX for banking as a new deputy
governor of the central bank.

Out of the 39 legislators that participated in the selection,
which ended close to midnight on Friday, 22 voted for
Burhanuddin, 16 for the only other contender, Bank Indonesia
director of banking supervision Maulana Ibrahim, and one
abstained.

The voting result is expected to be approved by the House at a
plenary session on Monday.

Burhanuddin will replace Subarjo Joyusumarto who quit from the
central bank early this month to head the Kuala Lumpur-based
Southeast Asia Central Bank Governors Conference (SEACEN), a
training and research center for Southeast Asian central banks.
Subarjo's term was not supposed to end until 2001.

Under the new Bank Indonesia law on the independency of the
central bank, members of the board of governors are selected by
the House of Representatives.

Burhanuddin, a U.S.-trained economist, will be responsible for
the central bank's banking policy.

Part of his job will be to decide on whether to recapitalize
or liquidate publicly listed Bank Bali.

Burhanuddin declined to comment on Bank Bali, arguing that he
had as yet to study the matter.

He also said the Bank Bali problem was not his responsibility
alone but was also the responsibility of the other members of the
board of governors.

The Financial Sector Policy Committee (FSPC), which groups
several senior economics ministers, decided on Thursday to
transfer Bank Bali from the Indonesian Bank Restructuring Agency
(IBRA) back into the hands of Bank Indonesia.

Bank Indonesia must now decide whether to recapitalize or
liquidate Bank Bali.

Some analysts, however, said that Bank Indonesia would be
reluctant to liquidate the bank because such a move would cost
the government about Rp 6.8 trillion in cash, due to its blanket
guarantee on depositors' money.

In comparison, recapitalizing the bank would cost the
government some Rp 5.2 trillion in bonds, not cash.

Gadjah Mada University economist Sri Adiningsih said another
option for Bank Indonesia was to merge Bank Bali with a stronger
bank.

Burhanuddin said his immediate program was to improve Bank
Indonesia's information system, and to upgrade the banking
supervision system before the supervisory role is transferred to
a special independent agency in 2002.

Burhanuddin was hopeful of becoming a deputy governor at the
bank earlier this year but he was defeated by Aulia Pohan. Many
Bank Indonesia employees went to the legislative building to give
support to Burhanuddin.

There have been rumors that Bank Indonesia Governor Sjahril
Sabirin was against Burhanuddin becoming a deputy governor.

Sjahril is currently being detained by the Attorney General's
Office over alleged involvement in the high profile Bank Bali
scandal, which emerged in the middle of last year. (rei)