House against proposal to give IBRA special power
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)