IBRA needs eight years to sell property assets
The Jakarta Post, Jakarta
The Indonesian Bank Restructuring Agency (IBRA) will need at least eight years to sell all of its property assets, way beyond the agency's lifetime, which is due to end in 2004, the Indonesian Property Study Center (PSPI) said.
PSPI director Panangian Simanungkalit said that the market absorption of property was currently very limited, making it difficult to sell quickly.
According to research by PSPI, property assets held by IBRA in 2002 will total about Rp 70 trillion (US$7 billion), of which some Rp 45 trillion will be held by IBRA's Asset Management Credit (AMC) unit and the rest by the Asset Management Investment (AMI) unit.
IBRA received various assets worth around Rp 600 trillion from closed banks, recapitalized banks and indebted former bank owners.
The AMC division holds collateral assets of bad loans transferred by the above group of banks, while AMI is in charge of assets handed over by ex-bank owners to repay debt to the government. IBRA must sell these assets to raise cash to help finance the state budget deficit.
Panangian said that only Rp 15 trillion could be returned to the banking system while the remaining Rp 55 trillion were likely to be auctioned off to the market.
"Some Rp 20 trillion is in land, while the rest are assets such as hotels, office buildings, apartments and other commercial property assets," he was quoted as saying on Wednesday by Antara.
Panangian said that under current conditions, the market would only be able to absorb Rp 7 trillion a year. In the meantime, IBRA was scheduled to be disbanded in 2004.
"This means that for the next two years, until 2004, IBRA has to sell at least Rp 18 trillion worth of assets," he added.
Panangian said that BPPN's plan to establish a holding company for property assets should be able to speed up the process, adding that the auctioning of the assets had to be based on a clear cut and transparent strategy to be able to achieve optimum results.
The holding company would take over the property assets once IBRA's mandate ends in 2004.