Government mulls IBRA replacement after 2004

Government mulls IBRA replacement after 2004

Berni K. Moestafa, The Jakarta Post, Jakarta

The government may replace the Indonesian Bank Restructuring
Agency (IBRA) with one or several state companies that would take
over IBRA's unfinished asset sales and credit restructuring
tasks, after the agency reaches its sunset date in Feb. 2004.

Coordinating Minister for the Economy, Dorodjatun Kuntjoro-
Jakti said the idea was at an early stage, and by 2004 would be
subject to approval by a new government.

"We are considering various options, and may imitate models
used in other countries," Dorodjatun told reporters after a
coordinating meeting between economic ministers.

IBRA was set up in 1998 as part of a government-funded bail
out program for banks hit by the 1997 economic crisis.

Its main task is to restructure sick banks by, among other
things, replacing their bad loans with government bonds.

With more than Rp 600 trillion spent on curing banks, the bail
out program for banks is one of the world's costliest.

To recover the public funds, the agency restructures the non-
performing loans and sells them back to the banking sector.

It is also tasked with selling assets of debtors that have
been surrendered as part of debt repayments or as collateral.

As IBRA took over debtors' assets, most of the country's
private sector, which had previously been driving the economy,
has fallen under state control.

Their return to the private sector is seen as important to
revitalize the economy, since under IBRA most of the assets are
said to be poorly managed.

But IBRA has been slow in its asset sales, and economists
bemoan the intense politicking in the agency interfering with its
work.

Many of its debt work outs span mare than 10 years, with
others leading IBRA to own equity or properties that were hard to
sell.

IBRA chairman I Gede Putu Ary Suta has said it was impossible
to dispose of the assets IBRA has amassed under debt
restructuring deals by 2004.

State Minister for State Enterprises Laksamana Sukardi, who is
in charge of IBRA, said IBRA's replacement would finish the job.

"We haven't decided on whether there'll be one or more
(replacements), it's likely that we'll form several based on the
sectors," Laksamana said.

He said the government might form a special joint venture to
unload IBRA property assets once the agency ceased to exist.

Last year Ary Suta said he had planned to propose the forming
of holding companies to handle the sale of IBRA properties and
equity.