Government puts an end to decision-making role of FSPC

JAKARTA (JP): The government ended on Wednesday the decision- making role of the Financial Sector Policy Committee (FSPC), Coordinating Minister for the Economy Burhanuddin Abdullah said.

Burhanuddin said that the FSPC would return to its original function of providing policy recommendations on major corporate debt restructuring programs to the finance minister.

Speaking to reporters following a Cabinet meeting on the economy, he said that during the past year, the FSPC had deviated from its original function.

The FSPC groups several senior economic ministers led by the coordinating minister for the economy.

But when the committee was chaired by Rizal Ramli, the previous chief economic minister and current finance minister following the recent Cabinet reshuffle, it had been strongly criticized for its strong intervention in the Indonesian Bank Restructuring Agency (IBRA), which is mandated to restructure a huge amount of bank nonperforming loans (NPLs).

Experts have said that the strong intervention by the FSPC had partly contributed to the slow progress in the restructuring work at IBRA, a unit of the finance ministry.

Legislators have recently demanded the government either dissolve the FSPC or limit its function.

The powerful role of the FSPC had also become the center of a dispute between Rizal and the former finance minister Prijadi Praptosuhardjo, who had often refused to endorse the corporate restructuring decisions taken by the committee.

One of the high profile cases is the restructuring deal made by the FSPC in April on the debt of petrochemical giant PT Chandra Asri owed to Japan's Marubeni Corp., which was rejected by Prijadi and IBRA.

An executive of the FSPC recently said that the finance ministry under Prijadi had declined to implement some 140 decisions made by the committee.

Meanwhile, IBRA's new chairman I Putu Ary Suta said that he planned to expedite the decision-making process within IBRA to ensure that it could achieve its mandate by February 2004, when the agency would be dissolved.

"If the work flow continues in the old manner, we may have difficulties in meeting the target," Ary Suta said.

IBRA, established in January, 1998, currently controls various banking assets worth around Rp 540 trillion. The agency is mandated to restructure the assets and sell them to the market to raise cash to help finance the state budget deficit.

But finance minister Rizal said earlier this week that the agency had so far only managed to divest around 20 percent of the total assets.

President Abdurrahman Wahid appointed Ary Suta as the new chairman of IBRA early this week, replacing Edwin Gerungan, who had gained a reputation for his strong integrity during his seven-month term. (rei/dja)