Controversies abound over IBRA's planned closure

M. Taufiqurrahman, The Jakarta Post, Jakarta

After five years of being tasked to restore the condition of the national banking sector and to help recover the huge cost of the government's bank bailout program, the Indonesian Bank Restructuring Agency will officially be disbanded in February 2004.

But as the official closing date draws nearer, controversy abounds as to whether IBRA's existence should continue.

IBRA's oversight committee recently recommended that the agency be dissolved in February 2004 as stipulated under Government Regulation No.17/1999. The committee's recommendation, however, is nonbinding.

"The prolonged existence of IBRA merely reflects that Indonesia has not fully recovered from the economic crisis yet," the chairman of the oversight committee, Mar'ie Muhammad, said.

IBRA Chairman Syafruddin Temenggung said he was determined to see the end of the agency's term through to the end of 2003. Echoing Mar'ie, he said that the dissolution of IBRA would be viewed as a sign that Indonesia had recovered from the late 1990s' economic crisis.

He also claimed that IBRA had sold about 75 percent of its assets transferred from the banking sector. The agency received billions of dollars worth of assets from troubled banks and former bank owners in the wake of the late 1990s financial crisis. One of the agency's mandates is to restructure the assets and sell them to raise cash to help finance the state budget deficit.

For reasons that are entirely different from Syafruddin's argument, analysts also called for an immediate closure of the agency.

Revrisond Baswir, an economist at the University of Gadjah Mada (UGM), said that IBRA had to be shut down in February 2004 at the latest. But prior to the closure, a thorough audit of the agency's performance has to be carried out, he said.

"Prior to its dissolution, IBRA should give an account of its attempts to restore the banking industry and also a number of (alleged) irregularities," he told The Jakarta Post, adding that the process was important to make sure that someone could be held responsible for any wrongdoing and that there should be no attempts to cover anything up.

Since its establishment in 1998, IBRA has had six chairmen.

As for the assets, IBRA has failed to divest itself during its tenure, Revrisond said two options were available for the government.

"The assets could either be transferred to the Agency for State Claims and Auction under the Ministry of Finance or offered through a free auction to the banking industry," he said.

Meanwhile, another analyst, Faisal Basri of the University of Indonesia, told the Post that IBRA had to be dissolved soon given its corrupt nature.

"IBRA has been corrupt from the very first day of its inception. Now I am concerned more than ever because the closing date is fast approaching, and control over the agency is unraveling because it has to race against time to sell the wholesale assets in its hands. To me the cost of continuing IBRA outweighs its benefits," he said.

Faisal said that after IBRA was closed down, the government should form a task force to manage its remaining assets.

"The task force should be given a specific timetable so that it can finish its job as scheduled," he said.

However, a number of government officials do not share the same view that IBRA should be dissolved as scheduled.

The director general of financial institutions at the Ministry of Finance Darmin Nasution said that despite the designated closing date, IBRA should be maintained as it had yet to solve numerous problems pertaining to bank assets.

"What about the problems IBRA has yet to find the solutions to?" Darmin asked, adding that the agency still had to administer about Rp 99 trillion (US$12 billion) worth of assets within their vault.

He was earlier quoted as refusing to shoulder the burden of administering dubious assets not yet recovered by IBRA.

State Minister of National Development Planning/Bappenas chairman Kwik Kian Gie shared Darmin's view that IBRA's term should be extended as the agency still had a lot of work to do.

He said that IBRA was the only institution capable of recovering the bulk of assets as it had enough personnel to carry out the task.