IBRA chief vows to speed up asset sales

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)