House wants end to FSPC's role in economic restructuring
House wants end to FSPC's role in economic restructuring
JAKARTA (JP): Legislators called on the government to
terminate the role of the powerful Financial Sector Policy
Committee (FSPC) in the country's major bank and corporate
restructuring programs of the Indonesian Bank Restructuring
Agency (IBRA).
The legislators said on Wednesday that the FSPC had not been
effective and had instead obstructed the work of IBRA.
"The finance minister can propose the President dissolve
FSPC," said Paskah Suzetta, a senior legislator of the Golkar
Party, during a hearing between the House of Representatives
Commission IX on state budget and finance, and Finance Minister
Prijadi Praptosuhardjo.
"The FSPC has often made damaging intervention (to IBRA),"
added Zoelvan Lindan, a legislator of the Indonesian Democratic
Party of Struggle (PDI-Perjuangan).
FSPC groups several senior economic ministers led by
Coordinating Minister for the Economy Rizal Ramli. The committee
has the final say on major bank and corporate restructuring
programs designed by IBRA.
The FSPC was formed early last year, following the high
profile Bank Bali scandal, which allegedly involved a senior
official of IBRA. The committee was supposed to ensure good
governance at the agency.
Prijadi is expected to respond to the calls at a follow-up
meeting next week.
The legislators' demand, however, may create a new political
obstacle to the country's major economic reform program already
strongly criticized by the International Monetary Fund due to the
snail's pace of the reform implementation.
But Paskah said that the FSPC had failed to make credible
decisions.
"It's only slowing the work of IBRA," he said.
He said that according to the existing law, there was no
obligation for IBRA to seek the approval of the FSPC for its
major bank and corporate restructuring program.
"IBRA should only report to the finance minister," Paskah
said.
Zoelvan added that IBRA must only report to the finance
minister to ensure that the agency was not being used as a
"vehicle" by a certain group.
The question over the role of the FSPC gained momentum
following the recent resignation of two IBRA deputy chairmen
which was widely believed to have been prompted by the extensive
intervention by the FSPC in IBRA.
IBRA deputy chairmen Jerry Ng and Mahmuddin Yasin recently
announced their plans to resign. But the finance minister has
insisted Mahmuddin stay.
House members also suspected that the resignation of the two
top IBRA officials was due to the strong intervention by the
FSPC.
"Why have they resigned? Is it because of the strong
intervention (of FSPC)? They can't just submit their resignation
without a clear reason," legislator Tjahjo Kumolo said.
The top IBRA officials openly denied suggestions that their
resignation had anything to do with FSPC intervention.
IBRA controls some Rp 600 trillion worth of banking assets
taken over from closed down, nationalized and recapitalized
banks. The assets include bank non-performing loans (NPLs) and
ownership in various companies surrendered by former bank owners
to repay their debt.
The agency must sell the assets to raise cash to help finance
the state budget, and must also restructure the NPLs.
Under the existing mechanism, IBRA must seek the approval of
the FSPC on any major debt restructuring or asset sale programs
worth over Rp 1 trillion.
But many of the decisions taken by the FSPC have received
widespread criticism, including the seemingly special deals
provided to indebted conglomerates.
The IMF, which is providing a multibillion dollar bailout loan
to the country, has also criticized the delay in the sale of IBRA
ownership in the publicly listed Bank Central Asia (BCA) and Bank
Niaga late last year. (rei)