House against proposal to give IBRA special power

JAKARTA (JP): The government's proposal to include in the banking bill a clause which vests the Indonesian Bank Restructuring Agency with an unchallenged power is facing opposition from legislators.

Thomas Suyatno, a member of House Commission VIII for finance, the state budget, and science and technology from the ruling Golkar faction, and Commission chairman I Gde Artjana of the Armed Forces faction said on Monday the proposal was in conflict with the country's legal system which puts nobody and no agency above the law.

"No one and no agency in this country is above the law. IBRA should comply with the existing law and the presidential decree (which created it)," Thomas said on the sidelines of the commission's deliberations on the banking bill with Minister of Finance Bambang Subianto.

Thomas is also head of the Advisory Board of the Federation of Private Domestic Banks (Perbanas).

Director General of Financial Institutions at the Ministry of Finance Susiati B. Hirawan has said that the government proposes to invest IBRA with the special authority to prevent the agency's decisions from being challenged in court.

"If IBRA has to get caught up with the courts, it's no longer crisis management. There has to be a special power because we're in a crisis and we need to move fast," she said.

"I hope the House can understand this," she added.

The House on Monday started debating the bill, an amendment to the 1992 Banking Low, and the legislature is slated to give its decision on Oct. 16.

Controversy has surrounded the special power for IBRA, which basically gives the body carte blanche to rehabilitate banks under its supervision even when its actions contravene existing laws.

Artjana and Thomas are among the group of legislators who particularly oppose clause 37A extending the special power to IBRA, especially its asset management unit (AMU).

IBRA is to end its supervision of dozens of ailing banks by the end of this year, and AMU is to start absorbing the banks' nonperforming assets and selling them on the market early next year.

Artjana said that after IBRA ceased operating, all supervision and handling of ailing banks should revert to Bank Indonesia, the central bank.

"IBRA's (future) dissolution is already a principle since President B.J. Habibie has hinted that the central bank will be independent and regain the right to handle everything related to banking supervision and guidance," Artjana said.

Several other Commission's members, including Oke F. Supit and Mubha Kahar Muang of the Golkar faction and Soelaiman Biyahimo of the United Development faction also voiced their opposition on Monday to the bill's clause allowing foreign investors to hold a 99 percent stake of local banks.

They said they were in principle not against the government's move to liberalize the country's banking industry to get capital injection from foreign investors, but banking ownership by foreign investors should be limited to between 75 percent and 85 percent.

"Ninety-nine percent is too much," Mubha said. She noted that almost all commission members disagreed with the bill's clause.

Oke said the government should be far-sighted and should not think the country's banking industry would be unable to emerge from the crisis without foreign participation.

"Today, our economy is in a difficult situation. But will the difficult situation never end?" Oke asked.

Oke noted many local investors were in fact able to inject capital into the country's ailing banks but would only be willing to do so once the government created a just and fair economic and political system.

If economic and political stability are already in place in the country, Oke said, "foreign investors will come even if they are offered only 50 percent."

"But none of them will invest amid the current instability even if we offer them a 100 percent stake," he said. (jsk)