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)