House approves funds for new asset-management firm

House approves funds for new asset-management firm

Rendi A. Witular, The Jakarta Post, Jakarta

he House of Representatives approved on Tuesday a request
from the Ministry of Finance to allocate funds from the current
state budget as start-up capital for a new entity to administer
banking assets transferred from the now-defunct Indonesian Bank
Restructuring Agency (IBRA).

Chairman of House Commission IX for financial affairs Emir
Moeis said the ministry might use the requested Rp 300 billion
(US$35.7 million) funds to finance temporarily the operations of
the asset-management company.

"The commission approves the ministry's plan to use the state
budget in financing the operation of the company," said Emir in a
hearing with Minister of Finance Boediono.

The government last week closed down IBRA after it had
operated for more than five years. The government agency, which
took over around Rp 650 trillion-worth of assets from troubled
banks and their former owners in the wake of the late 1990s
financial crisis, has not been able to dispose of all of the
assets, forcing the government to transfer the unsold ones to the
ministry. The assets are in the form of shares in banks,
nonperforming loans and property and shares in a number of
companies.

Boediono said the state budget funds were needed immediately
to maintain and manage the assets to prevent their value from
declining, and to protect them from being looted.

He explained the ministry would return the state budget funds
before the end of the year, from part of the proceeds raised from
the sale of the assets.

The government has asked the Supreme Audit Agency (BPK) to
audit the assets transferred from IBRA. But Boediono told
lawmakers that the asset management company would start selling
the assets even though the BPK audit had yet to be completed.
Such a strategy was aimed at avoiding a further decline in the
value of the assets.

Boediono was quick to say that the company, which will have a
five-year tenure and be led by a senior ex-IBRA official, would
not engage in a fire sale of the assets.

IBRA transferred assets estimated to have a market value of
around Rp 15.1 trillion (US$1.77 billion).

The assets are divided into two categories: those that are
"free and clear" in terms of legality, and those that are not.

The former will be managed by the asset-management company,
and have a total market value estimated at Rp 10.8 trillion.

With regard to the second type of assets, Boediono said that
they would be managed by the clearance team before being
submitted to the asset-management company.

According to Boediono, the team would be chaired by himself,
with State Minister of State Enterprises Laksamana Sukardi as
vice chairman, and National Police Chief Da'i Bachtiar, Attorney
General M.A. Rachman and Minister of Justice and Human Rights
Yusril Ihza Mahendra as members.

The team will be given six months to sort out the problem.

The market value of assets deemed not free and clear is Rp 4.3
trillion.