Ibra closure to leave huge burdens

Ibra closure to leave huge burdens

Dadan Wijaksana, The Jakarta Post, Jakarta

With the government preparing to close down the Indonesian Bank
Restructuring Agency (IBRA) two weeks from now, the country
stands to lose about 72 percent of the Rp 660 trillion (about
US$7.76 billion) in state funds injected into ailing banks during
the late 1990s financial crisis, leaving the people to bear the
burden.

Set up in 1998, IBRA has managed to recover only about Rp
172.4 trillion of the state funds (representing a recovery rate
of around 28 percent), through the sale of assets it took over
from ailing banks and their former owners. One of the agency's
three main tasks was to maximize the recovery rate and minimize
the loss of state funds.

IBRA chairman Syafruddin Temenggung put down the loss of the
state funds simply as part of "the cost of the crisis".

"If compared to the fiscal target (annual proceed target for
the state budget), IBRA never fell short of those targets. In
fact, IBRA's compliance stands at about 116 percent," Syafruddin
said recently.

Though the agency boasts that an overall recovery rate of 28
percent is respectable, taxpayers will still have shoulder the
lost funds. The state budget will have to cover the losses,
meaning budget allocations for crucial development programs will
be limited.

In 2004, for example, the budget has allocated Rp 62.4
trillion to service massive domestic debts resulting from the
cost of the government bank bailout program. That amount
represents more than 20 percent of the full-year tax revenue.

Some experts have criticized IBRA for failing to restructure a
huge part of the non-performing loan (NPL) assets it took over
from troubled banks.

Dradjad Wibowo, an economist at the Institute for the
Development of Economics and Finance, said moves by IBRA to sell
unrestructured NPLs at huge discounts to local banks in a bid to
meet state budget targets partly contributed to the low recovery
rate.

He added that banks purchasing the unrestructured bad loans
could be put back in danger because the bad loans would inflate
their NPL levels if not restructured.

IBRA was supposed to restructure the assets before selling
them to investors.

Despite the low recovery rate of the assets under IBRA, the
agency has moved toward dropping the threat of criminal charges
against several former bank owners. Many of these former bank
owners were among the biggest recipients of the state bailout
funds.

Siti Hardijanti "Tutut" Rukmana, former president Soeharto's
eldest daughter and the former owner of Bank Yakin Makmur, is the
latest to receive release and discharge status. She has been
deemed by the Financial Sector Policy Committee (FSPC) -- a
powerful grouping of economics ministers overseeing IBRA -- as
having been cooperative in settling her debt to the government.

Tutut adds to the already long list of debtors having been
declared as cooperative by the FSPC. This list includes Hashim S.
Djojohadikusumo, Njoo Kok Kiong, Honggo Wendratmo, Suparno
Adijanto, Andy Hartawan, Ganda Eka Handria, Philip S. Widjaja and
Mulyanto Tanaga, with a combined debt of more than Rp 600
billion.

Also included in the group: Sudwikatmono (former owner of Bank
Surya and Subentra), Then Nin King (Bank Dana Utama), Hendra Liem
(Bank Bumi Internasional), Ibrahim Risjad (Bank Risjad Salim),
Salim (BCA) and Sjamsul Nursalim (BDNI).

All are among the 39 bank owners who received Rp 144.5
trillion in state funds during the crisis. Many of them were
later accused of having misused much of the bailout funds by
channeling the money into affiliated businesses -- a crime under
the banking law.