Govt warned against excessive interference in IBRA
JAKARTA (JP): Economists warned the government on Saturday against excessive interference in the management of the Indonesian Bank Restructuring Agency (IBRA) following the placing of the key agency under the supervision of State Minister for State Enterprises Laksamana Sukardi, a confidant of President Megawati Soekarnoputri.
"Can IBRA now act independently? A minister will be directly involved ... It will give rise to unhealthy perceptions," he told The Jakarta Post.
On Sept. 13, Megawati signed two decrees: Number 63/2001 and 64/2001 on the transfer of authority over IBRA and the country's state-owned enterprises from the finance ministry to the Office of the State Minister for State Enterprises.
With the new decree, Laksamana will also have the right to appoint and dismiss key IBRA people.
The government has argued that the transfer was needed to reduce the work load of the finance ministry and to improve efficiency as the privatization program being carried out by the Office of the State Minister for State Enterprises was basically similar to IBRA's asset sale program.
IBRA controls assets worth around Rp 600 trillion (US$66 billion) which were transferred from former bank owners, and closed and troubled banks. Since its establishment in early 1998, the agency has often been the target of interference by politicians and influential businessmen.
The agency must restructure the assets and sell them to the market to raise cash to help cover the state budget deficit.
IBRA is targeted to raise Rp 27 trillion in cash this year, and Rp 35.3 trillion next year, while the privatization program is targeted to raise some Rp 6.5 trillion.
Pande, however, doubted that the integration of the two functions -- privatization of state-owned enterprises and the sale of assets managed by IBRA -- would be more effective under one organization.
"That's just an excuse people are using to justify the integration. While I'm not saying that it's wrong, how can putting sick assets together with more sick assets produce a healthy outcome?" he said, explaining that all the state-owned companies targeted for privatization and the assets to be sold by IBRA had in common was that they were "sick" assets.
Pande was also concerned about the political nuances surrounding the integration, saying that Laksamana was also an executive of Megawati's Indonesian Democratic Party of Struggle.
"This could lead to a very unhealthy impression which should at all costs be avoided," he added.
Bustanul Arifin, an economist from the Institute for Development of Economics and Finance (Indef), said the deep political implications of the integration of IBRA into Laksamana's portfolio could become the bane of the current government.
"I'm afraid that if this government interferes too much (with the operations of IBRA) and deviates from the rules of transparency, this administration will be digging its own grave," he said.
Bustanul explained that as a major source of finance, putting the sale of IBRA assets and of state enterprises under a "party man" would give rise to suspicions that the proceeds of asset sales would go into the party's coffers.
Both Pande and Bustanul agreed that Laksamana would have to convince a lot of people that he was not working for the benefit of his party but rather for that of the country.
"IBRA has to be accountable, be open to the public and information has to remain accessible to the public," Bustanul said, explaining that greater transparency was needed especially as the overhead costs of the agency was very high while the public had yet to see any significant results from asset sales.
Separately, Golkar party legislator Paskah Suzetta questioned the legitimacy of the integration, saying that it was against the 1998 law on banking.
Also voicing concern over the loss of IBRA's independence, he explained that the law on banking stipulated that the government could establish a special body on a temporary basis to restructure unhealthy banks, including selling off assets belonging to those banks.
Paskah, who sits on the House of Representative's Commission IX on financial and development planning affairs, asserted that incorporating this special body into the government structure would directly violate the law.
He said that the House would invite the minister of finance to a hearing next week to explain the presidential decree.(tnt)