IBRA needs eight years to sell property assets
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.