Holding company to manage IBRA's unsold asset
Fabiola Desy Unidjaja and Dadan Wijaksana, The Jakarta Post, Jakarta
The government will set up one holding company, instead of three as previously reported, to take over assets that remain unsold by the Indonesian Bank Restructuring Agency (IBRA) by the time its term expires next month.
"The remaining assets, worth Rp 40 trillion or 5 percent of the total, will be handed over to the company, called the assets management company," Coordinating Minister for the Economy Dorodjatun Kuntjoro-Jakti said on Thursday, adding that the company would be under the supervision of the Office of the State Minister of State Enterprises.
Dorodjatun was speaking to reporters after attending a Cabinet meeting discussing, among other things, affairs related to IBRA.
He added that the government was determined to move ahead with its plan to close the agency in February, as it would send a signal that the economy had made significant progress and was leaving behind the scars resulting from the late 1990s financial crisis.
"We have completed the special program with the IMF. We have also closed down JITF and all else related to the crisis. All that's left is IBRA," Dorodjatun said, referring to the Jakarta Initiative Task Force, which helped mediate restructuring talks between the corporate sector and foreign creditors.
IBRA is tasked with cleaning up the country's messy banking sector, saddled with huge bad debts following the 1998 crisis. In total, it took over more than Rp 600 trillion worth of assets from bankrupt or ailing banks.
It is mandated to restructure and sell those assets -- in the form of nonperforming loans and fixed assets -- to raise funds to help finance the state budget, which is ironically burdened by the huge cost of the government bank bailout program.
About a month away from its closure, the agency has sold the majority of the assets under its control with an average recovery rate of about 28 percent, excluding the remaining assets.
IBRA chairman Syafruddin Temenggung has said the new holding company would not be burdened with fiscal targets, so that it could focus on "restructuring" rather than on selling assets.
Aside from that, Dorodjatun added, a new institution would also be set up, this one under the Ministry of Finance, to take over the role of IBRA in implementing the government's blanket guarantee program on bank deposits.
The institution would operate on a temporary basis -- pending the establishment of a permanent unit called the deposit guarantee agency (LPS), which requires a law as its legal basis.
The government is currently drafting the law.
In addition to all that, various government agencies and instruments would also tighten the coordination in dealing with unfinished business related to IBRA's big debtors (former bank owners), said Dorodjatun.
"This matter, after IBRA's dissolution, will be jointly dealt with by the FSPC, the National Police, the Attorney's General Office, the Ministry of Justice and Human Rights," he said.
FSPC is the Financial Sector Policy Committee, a powerful grouping consisting of senior economics ministers.
"The message is clear: debtors deemed uncooperative (in settling their debts) will face litigation."
Of 39 debtors who signed debt settlement agreements with IBRA in the late 1990s, only 13 former bankers have been declared cooperative.