Finding Sjahril Sabirin's successor

Pitan Daslani, Publisher, indocapital.com, Jakarta

Who would be the right candidate to replace Sjahril Sabirin, the incumbent governor of Bank Indonesia now approaching retirement age? Should it be one of the three senior bankers that President Megawati Soekarnoputri handpicked for a fit and proper test? Logically and officially, yes. But wait a minute.

More important is the question of the fit and proper test itself. Legitimacy apart, is the Bank Sub-Commission of the House of Representatives (DPR) really qualified enough, by international professional banking standards, to conduct a test when it is composed of politicians with no experience in international banking -- except for their textbook knowledge and local economic background, not to mention presumed temptations on the part of the Commission in the run-up to the 2004 general elections?

A number of well-known economists have surprisingly made affirmative comments on the candidates, the very people they had previously attacked over the scandal of the Bank Indonesia liquidity support (BLBI) funds.

A big question that disturbs many observers is why the name of outspoken Senior Deputy Governor Anwar Nasution is not on the list.

There are at least three different streams of political business interests which have taken Miranda Goeltom, Burhanuddin Abdullah and Cyrillus Harinowo closer to Sjahril Sabirin's chair.

First, is the political agenda for the next general elections. A stable and preferably generous central bank headed by an ally would certainly be a desirable choice for those wishing to wink at the highest monetary authority.

Second, are the maneuvers of white-collar bandits -- or corrupt officials --- trying hard to conceal their fortune behind the walls of BLBI deadlock. Such officials with terrible track records are not unknown to the Supreme Audit Board (BPK).

Deny Daruri, director of the Center for Banking Crisis, was blunt when he said on Jakarta News FM radio station on Feb. 18 that in fact, when President Megawati revealed the bankers' names, people immediately remembered a BPK audit report on the misuse of BLBI, which contained the names of two of the candidates.

"We simply cannot accept them...they need to be tested against good moral standards and integrity, apart from professionalism. If people like (House Speaker) Akbar Tanjung support their candidacy, it's only because he doesn't have integrity," Daruri said.

The Center for Banking Crisis believes these three candidates are incapable of conducting a "policy revolution" for the central bank. Besides, in Daruri's words, "they can easily be intervened with", by authorities above them.

Banking analysts doubt that Miranda, for instance, though seen as a good professional and preferred candidate, has the courage to say "no" to the President in the way that Sjahril Sabirin did to former president Abdurrahman "Gus Dur" Wahid, who personally disliked him and sent him into detention.

In the years until his ouster, Gus Dur was at war with Sjahril, but the latter never wanted to bow to the then- president's pressure, even though it cost him time in court and behind bars. It would be a disaster if his successor had a weaker personality.

The third stream of interests is the political vehicle on which conflicting interest groups ride in Indonesia's relations with such international institutions as the IMF.

This is more of a dark tunnel with no light at its end, except for the outcome of interactions involving the central bank, the international lending institution, Indonesia's Bank Restructuring Agency (IBRA) and state-owned "recap" banks.

This is also the mysterious domain in which the BLBI scandal emerged, submerged and disappeared. IBRA came into existence as a logical consequence and right vindication of a wrong start. The government's injection of Rp 480 trillion worth of recap bonds and other expenses totaling Rp 650 trillion in state debt to state banks and corporations -- for which it has to pay Rp 70 trillion every year in interest obligations -- also existed in this mysterious domain, as did IBRA's newfound hobby of selling off state assets.

Combine the three streams of interests as described above, and the only assumption is that BI is sitting at the center of all these maneuvers. Its governor, therefore, cannot be selected merely from considerations of professionalism alone. There are more than enough professionals at BI to run daily activities.

What the central bank won't have when Sjahril leaves office on May 17 is a strong leader with a clear vision of the monetary authority's role as a decisive factor in stabilizing Indonesia's economy.

That aside, now, the question of the fit and proper test. Given the crucial role that BI plays, especially at this juncture of economic crisis and global uncertainty, leaving the selection task to a handful of politicians at the Bank Sub-Commission, which represents only a third of Commission IX membership, is too risky a proposition -- unless it is a ploy to cover up a predetermined decision.

Against the backdrop of our current situation, the question of the fit and proper test for BI Governor cannot be confined to the authority and legitimacy of the legislature alone.

Unlike other institutions in the country, BI is part of the international monetary market and its existence cannot be inferred merely from its physical presence on Jl. M.H. Thamrin in Central Jakarta.

Selecting a chief for BI, therefore, is not as simple a question as selecting a professional to head the office in Central Jakarta. Perhaps it is time that the government considered inviting, for instance, the U.S. Federal Reserve or the Bundesbank of Germany to provide world-class consultancy services.

These services could range from the formulation of the parameters, scope, content and modalities of the fit and proper test in provision of an expanded cooperation, under which BI could be better facilitated in its domestic monetary stabilization programs, as well as in responding to policy changes that affect the global money market.

The legislature's Commission IX in charge of financial affairs, especially the Bank Sub-Commission, should not be fooled by the notion that a new BI Governor should be put in place as quickly as possible only because Sjahril is retiring.

President Megawati actually has final authority; if she wishes, she could extend Sjahril's term of office by another year, during which time she could find better candidates to from whom to select a governor.

During such an extension period, the House could perhaps review or even amend Law No. 23/1999 to cement BI's independence -- but at the same time, open a leeway through which possible manipulative practices behind BI's walls can be probed.

This would positively pare down BI officials' pride, if not arrogance, of being blunder-free super-humans.

Like the director of the Center for Banking Crisis who cannot choose any of the three candidates the President has forwarded, many banking analysts agree that BI needs a much stronger personality than that already proposed to sit on top of its leadership in the post-Sjahril era, especially in the run-up to the 2004 elections.