Foreign investors urged to buy assets from IBRA

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)