Tue, 07 Nov 2000

IBRA chief vows to speed up asset sales

JAKARTA (JP): The newly appointed chairman of the Indonesian Bank Restructuring Agency (IBRA) Edwin Gerungan vowed on Monday to speed up the disposal of the various banking assets managed by the agency.

Edwin said that the asset disposal must be accelerated because the agency was targeted to raise a greater amount of cash next year.

"We will accelerate the asset sale because the government has set a higher target," he told reporters following his inauguration ceremony.

Edwin also expressed confidence that the agency would meet this year's target of raising Rp 18.9 trillion (US$2.07 billion) in proceeds. The agency has so far raised around Rp 14 trillion.

The agency is targeted to raise around Rp 27 trillion next year to help finance the 2001 state budget which is being heavily burdened by the huge cost of the country's bank restructuring and recapitalization programs.

Edwin added that he must first study the various asset sale methods employed by the agency.

IBRA controls assets worth around Rp 600 trillion transferred from closed or recapitalized banks in 1998 and 1999 when the financial crisis deepened. The agency must dispose of these assets to the business sector in a bid to bring about economic recovery and also to raise cash.

But IBRA has received strong criticism, including that from the International Monetary Fund (IMF) which is providing a multibillion dollar bailout for the country, because of the slow pace of the asset sale process.

One of the latest examples was the delay in the planned sale of IBRA's stake in the publicly listed Bank Central Asia (BCA) and Bank Niaga until next year. The delay was made following a recommendation from the House of Representatives.

The sale of several assets pledged by the country's tycoons to repay the debts of their banks is in the pipeline for this year, including the palm oil plantations, oleochemicals division, TV station, and mosquito coil maker of the Salim Group.

IBRA, a unit under the finance ministry, was established in early 1998 with a mandate to help the country lift itself out of the economic crisis that started in the middle of 1997.

President Abdurrahman Wahid named Edwin on Friday as the agency's fifth chairman, replacing Cacuk Sudarijanto who was recently appointed to the cabinet as the Junior Minister for the Restructuring of the National Economy.

The appointment of Edwin, a career banker with 25 years of experience in Citibank and few political connections, has been well received.

"This is a positive development," said senior economist Emil Salim, who is also a former economic adviser to the President.

He said that the President had made a decision this time based on a professional judgment rather than political considerations.

"Edwin must be able to fight any political vested interests with professionalism and integrity," Emil added.

With huge assets under its management, IBRA is prone to interference by politicians and well-connected businessmen.

Emil said that IBRA must accelerate the sale of its assets because the proceeds were badly needed by the government now, but he warned that the sales must be conducted in a transparent manner because there were indications that the former owners of the assets wanted to repurchase them.

He said that the tycoons should have to repay their debts to the government if they had money instead of repurchasing the assets.

"IBRA must remove this kind of doubt through transparency," he said.

Economist Sri Mulyani also welcomed the appointment of Edwin.

But she urged the government not to replace the IBRA chief too often as it would only be counterproductive.

She also called on the agency not only to seek to meet its cash targets but to also be concerned with the quality of its work.

She particularly pointed out that the corporate restructuring deals made with certain conglomerates, including the Texmaco and Chandra Asri groups, had raised a question of quality.

These corporate restructuring deals have been criticized because they were seen as being equivalent to government bailouts. (rei)