Economist challenges liquidation measure

Economist challenges liquidation measure

JAKARTA (JP): Economist Didik J. Rachbini said yesterday that
the government's decision to liquidate 16 private banks was based
on nontransparent criteria.

"Bank Indonesia's decision to liquidate the banks was not very
transparent, because there are other banks which deserve to be
liquidated more than them," he said.

He noted that debt-ridden state-owned Bank Pembangunan
Indonesia should have been one of the banks that were closed.

Didik, a director at the Institute for Economic and Financial
Development, said the government's decision to close Bank Jakarta
was debatable, given the bank's good performance.

"I suggest the government make a binding contract license for
such banks by giving them two years to improve their performance
before revoking their licenses," he said.

Lawyer Todung Mulya Lubis said yesterday that Bank Indonesia,
as caretaker of the liquidation process, should be more aware and
firm in protecting depositors' savings at liquidated banks.

"Bank Indonesia has to back up the liquidation process so that
consumers aren't inflicted with losses," he said, adding that the
government should also protect the employees of liquidated banks.

The Indonesian Consumers Foundation hailed the government's
decision yesterday to liquidate the 16 troubled banks, but called
for more transparency.

It demanded the government to explain the reason behind the
liquidation to the public.

The government has pledged to compensate depositors up to Rp
20 million of their funds at the liquidated banks beginning Nov.
13.

Depositors who have more than Rp 20 million at liquidated
banks will receive the remainder of their funds after the banks
sell their assets.

The foundation also demanded the government to explain to the
public if there were other troubled banks, to restore public
confidence in financial institutions and to prevent a run on
other banks.

Probosutedjo, the chief commissioner of Bank Jakarta -- one of
the liquidated banks -- denied yesterday that his bank was
bankrupt.

He guaranteed the public that depositors and institutions
would receive their money back.

Bambang Trihatmodjo, one of President Soeharto's sons, also
challenged the government's decision to close Bank Andromeda,
saying the bank did not deserve such a punishment.

But both Probosutedjo and Bambang promised to pay back of all
the depositors' money despite their objections.

"We'll solve this problem with responsibility as indigenous
businessmen. We hope all customers remain calm," Bambang said.

Probosutedjo, Soeharto's half-brother, said he had a lot of
other businesses under the Mercu Buana Group which could help
Bank Jakarta pay back depositors' money. (08/icn/prb)