Give IBRA chief enough time

Set up in July last year at the request of the International Monetary Fund (IMF), the Oversight Committee of the Indonesian Bank Restructuring Agency's (IBRA) has worked without much fanfare. Dubbed "Mr. Clean" for his integrity, former finance minister Mar'ie Muhammad, the committee's chairman, disclosed in an interview with The Jakarta Post's' Dadan Wijaksana and Johannes Simbolon what his committee had thus far accomplished.

Question: It's now more than a year since your assignment to chair the committee. What has the committee achieved so far?

Answer: We have reviewed all the 22 memorandums of understanding (MOU) concluded between IBRA and 32 indebted business groups on their debt restructuring and submitted our conclusions to the government. All this was accomplished ahead of the mid-October 2001 schedule.

However, the Financial Sector Policy Committee (FSPC), which groups several senior economic ministers and is the highest policy-making body for IBRA, has publicly announced only 14 of my committee's review results. My committee got much help from its technical advisers, who are prominent consultants, such as KPMG Consulting Inc. and Ernst & Young.

It must have been expensive to hire these well-known consultants.

Not really. They only charged us US$10,000 per MOU, so with a total of 22 MOUs, it cost us only $220,000. People were surprised that we could hire such big-name consultants at such a low price.

To prevent a conflict of interest, each of the consultants was assigned to review the MOUs, which they were not involved with.

What were the results of your reviews?

The reviews which have been publicly announced by the FSPC can be viewed on IBRA's website www.bppn.go.id. Last week, we also launched our own website, www.oc.bppn.go.id, which will eventually carry all the results of our reviews.

Now what is your main duty?

As stipulated in the Letter of Intent (LoI) signed by the IMF and the government, the committee, basically, as an institution, has three main tasks and functions.

Firstly, to uphold and strengthen (IBRA's) structure of governance. Secondly, to monitor the strategic performance of IBRA, including overseeing all the agreements made by the agency and its debtors. Thirdly, to do other matters as required. This means that we can conduct an investigation or do some reviews with or without the government's request ... The committee can do whatever it deems necessary within its line of duty.

What can we expect from the government decision to transfer the supervision of IBRA from the Ministry of Finance to the Minister of State Enterprises Laksamana Sukardi.?

Hopefully, it will speed up the asset sale process at IBRA. We all know that the agency was set up to operate on a temporary basis until February 2004.

Under the supervision of such a credible person as Laks (the minister's nickname), IBRA can hopefully speed up the asset sale and debt restructuring process in line with the target set by the government. The state minister has the power now to appoint and dismiss IBRA's chairman and other key officials at the agency.

What does it take to make this powerful agency successful?

There has to be strong political support (for IBRA). We need some sort of national consensus from the government, legislature, academics, professionals and media about what IBRA has to do, and then to fully support it -- the same kind of support enjoyed by similar agencies in other countries, such as Malaysia and South Korea.

I know it was not so easy in the past, but I think it's possible now with the good rapport between the government and the House of Representatives. Their relationships are now heading into some sort of new equilibrium.

This (equilibrium) could be seen in the recent approval of the divestment of the 51 percent government stake in Bank BCA by the House. This is what I mean by strong political support.

On the other hand, IBRA should be run by individuals with a high level of professionalism, integrity, independence and operate with a high standard of accountability and transparency.

Should we use the same criteria for the IBRA chairman?

We certainly should. It does not matter who she or he may be, but the criteria for appointment or replacement must be clear. The current IBRA chairman ( I Gede Putu Arysuta), for instance, why don't we give him a chance to do his job?

There are at least two prerequisites we need to set to get the best out of the chairman: stability or certainty and a management contract.

Stability refers to certain guarantees. We should give him enough time and space to do his job so that he can make the best out of his job without having to worry much about his career.

We cannot afford to have four chairmen (of IBRA) in a year again like we did during the administration of former president Abdurrahman Wahid.

How can we expect someone to achieve anything when we give him less than four months to work? He would be demoralized instead.

The second condition is a management agreement between the state minister and the agency's chairman which stipulates the performance criteria for the latter.

That criteria must include what targets he should accomplish and what boundaries he cannot cross.

As a consequence, we must also set up a reward and punishment system so he will be challenged to always do his utmost because his career will depend on his performance.