Foreign investors urged to buy assets from IBRA

JAKARTA (JP): Coordinating Minister for the Economy, Finance and Industry Kwik Kian Gie encouraged foreign investors on Tuesday to be more active in acquiring assets currently managed by the Indonesian Bank Restructuring Agency (IBRA).

Kwik told hundreds of domestic and foreign businesspeople, diplomats and analysts at a business luncheon that the government wanted to return the huge assets to the control of the private sector as quickly as possible.

"We want to dispose of the assets in a quick and orderly manner," he said in referring to the estimated Rp 600 trillion (US$85.7 billion) worth of assets taken over by IBRA from closed, nationalized and state banks.

Kwik said the government did not design IBRA to be a holding company or an asset management company for a long time.

The business luncheon was sponsored by the Indonesia-Australia Business Council in cooperation with AmCham Indonesia, the British Chamber of Commerce and the Indonesia-Canada Chamber of Commerce.

Kwik said the government was keenly aware of the significant cost associated with managing the assets IBRA was holding and realized the importance of returning the assets to the private sector.

"Certainly, it's better to receive $1 million now than $1 billion a year from now," Kwik added.

In a bid to alleviate widespread concerns that IBRA would be politically directed to distribute its assets to indigenous businesspeople, Kwik reiterated that IBRA would not redistribute nor sell the assets to a few selected business groups.

"IBRA will be completely free from political interference. Of most importance is that IBRA should be run by competent people," he added.

IBRA, he added, would be required to regularly publish audited financial reports.

IBRA assets, he said, would be disposed of through open tenders, the Jakarta Stock Exchange, private placements and liquidation.

"The size and variety of the assets IBRA is holding or managing are such that the government now practically controls about 80 percent of the production units," Kwik pointed out.

"It is time now to sell," he added in reemphasizing the urgency and importance of returning the assets to the private sector.

The assets directly or indirectly owned and managed by IBRA consists of bad debts taken over from banks and equity holdings pledged by bankers and businesspeople to repay liquidity credits to the central bank.

Kwik said IBRA officials had been hesitant in acting quickly and firmly in selling the assets for fear that they might be prosecuted for corruption or malfeasance sometime in the future because many of the assets might have to be unloaded far below their book value.

IBRA chairman Glenn Yusuf expressed such fear last week.

"Suppose we sell our Astra International shares now, say at Rp 3,500 or Rp 4,000 a piece. But this price may rise to more than Rp 10,000 within the next few years in accordance with its business growth and good performance.

"But given the reform era, people may later accuse us of selling the shares too low through collusion. Therefore, we want legal protection from such possible litigation," Glenn said.

Kwik said the government would remove such fear by setting up a financial sector review committee which would indemnify IBRA officials against any losses or prosecution in the future, in so far as asset sales being done properly and fully according to set procedures.

IBRA vice chairman Farid Harianto told the business luncheon that the agency had set up five holding companies to manage the business assets (equity shares in going concerns) which had been pledged to IBRA by conglomerates as repayments of liquidity credits to the central bank.

Farid said PT Holding Perkasa is in charge of managing the assets pledged by the Bank Central Asia (Salim) Group, PT Tunas Sepadan Investama for the assets pledged by the Bank Dagang Nasional Indonesia/Gajah Tunggal Group, PT Bentala Kartika Abadi for the assets from the Danamon Group, PT Cakrawala Gita Pratama for the assets from the Modern Bank Group and PT Kiani Wirudha or the assets pledged by the Bank Bank Umum Nasional/Mohammad "Bob" Hasan Group.

"The holding companies are responsible for maximizing the value of the assets and selling them at the highest possible value," Farid added.

Regarding privatization of state-owned enterprises, Kwik said the government was now intensively reviewing the privatization conducted by the previous government.

There have been allegations that the former government's privatization efforts were mired in corruption and collusion. The speculation became stronger after the previous minister for the empowerment of state enterprises, Tanri Abeng, was implicated in the Bank Bali scandal.

Kwik added the government would see to it that all state companies would run under good corporate governance. (vin)