Give IBRA chief enough time

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.