IBRA lambasted for low recovery in asset sale
The Jakarta Post, Jakarta
Instead of bragging about its target-achieving feats, the Indonesian Bank Restructuring Agency (IBRA) should focus more on efforts to boost the recovery rate of its assets sales to minimize the burden of the state, experts said over the weekend.
"The agency seems to concentrate on efforts to generate the proceeds from assets sales only to meet the target. But they care less about its recovery rate," banking analyst Ryan Kiryanto, said.
"Some assets that could have brought in lots of money to the government and become engines for the economy, have been sold at cheap prices," he added
IBRA claimed on Thursday it had raised Rp 27.98 trillion (US$2.7 billion) in cash and Rp 10.6 trillion in recapitalization bonds, exceeding this year's target.
So far, IBRA has been selling off assets at a value much lower than they were at the time the agency took them over in 1998 from indebted former bank owners.
The recovery rate of the asset sales formerly belonging to the Salim Group, for instance, which is widely regarded as the most prestigious set of assets under the agency, has just managed to reach 48.6 percent by the end of 2001.
PT Holdiko Perkasa, a holding company charged with overseeing the disposal of former Salim assets, said it had collected more than Rp 11 trillion of gross earnings this year, or some 40 percent of IBRA's proceeds.
To date, IBRA has been enduring hard times in selling assets other than the high-profile Salim Group's.
IBRA took over assets from most of the country's conglomerates three years ago after they failed to repay their huge debts to the government.
The ex-bank owners who are also business tycoons signed an agreement with IBRA called the Master of Settlement and Acquisition Agreement (MSAA).
Under the agreement, former bank owners have to hand over their fixed assets, including company ownership, to the agency.
The Salim Group, for example, surrendered its ownership of 109 companies to repay a total debt of Rp 52 trillion to the government. The group previously had owned Bank Central Asia (BCA).
Aside from the Salim Group, Bob Hasan, (co-owner of the Bank Umum Nasional), Sjamsul Nursalim (owner of Bank Dagang Nasional Indonesia), Ibrahim Risyad and Sudwikatmono (owners of two smaller nationalized banks) have also signed the agreement.
However, the agreement also stipulated that the former bank owners would not have to provide additional assets if it turned out that the assets, when sold, were not sufficient to cover the debts.
The slow progress of selling assets aside from Salim's has just made the situation worse.
This could spell trouble as most -if not all- of the sold assets were purchased at values that were far less than when they were taken over by the government.
The latest example would be the recent disposal of the publicly listed PT Indomobil Sukses International to the Trimegah-led consortium.
IBRA sold its 72 percent stake in the country's second largest car maker to the consortium on Dec. 10 for some Rp 625 billion, or a mere one third of the company's value when IBRA took control of the company in 1998.
"This (Indomobil sale) is only one case. IBRA should have taken this into consideration to monitor its performance. Not just focusing on generating proceeds to meet the target," Ryan added.
Should IBRA keep selling assets at low prices, the loss that the state might incur, at the expense of public funds, would be enormous.
The government has issued around Rp 600 trillion worth of bonds to bailout ailing banks.
Meanwhile, IBRA asset disposal head, Dasa Sutantio said asset values declined because of weaker sentiment in the stock market.
As some assets are valued in accordance with their stock value in the market, their recovery rates depend on the market index movements.
"Nobody can determine the market's movement, neither the debtor nor the creditor," Dasa said.
He said an improved macro economic condition would help bolster market sentiment.