IBRA raises another Rp 1t from corporate loan sale

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA) said on Thursday that it had raised some Rp 1 trillion (US$88.07 million) from the latest sale of corporate debt assets.

Head of IBRA loan asset disposal division Mohammad Syahrial said in a press statement that the corporate loan assets, which consisted of dollar and rupiah assets, were sold to foreign and local buyers via an open tender.

Syahrial said that the Rp 1 trillion proceeds from the third tranche asset sale reflected a recovery rate of 40.09 percent, which was lower than the 70 percent recovery rate in the first tranche and 50 percent in the second.

"The lower recovery rate of the third tranche sale is greatly influenced by the current unfavorable Indonesian macroeconomic conditions," he said.

Indonesia's current economic woes and political instability have deterred foreign investors from investing their money in the country. The plan by the People's Consultative Assembly (MPR), the country's top legislature, to impeach embattled President Abdurrahman Wahid at a special session scheduled for August 1 has created concern of possible conflict between the President's fanatical supporters and opponents.

IBRA, a unit under the finance minister established in early 1998 in the wake of the 1997 regional financial crisis, received around Rp 260 trillion worth of non-performing loans (NPLs) from ailing domestic banks. The agency is tasked to restructure the loans and sell them to the market to raise cash to help finance the state budget deficit.

In addition to the loan assets, IBRA had also received various forms of fixed assets from banks and former bank owners worth hundreds of trillion of rupiah. The agency must also dispose of these assets to raise cash.

IBRA is targeted to raise some Rp 27 trillion this year. As of the end of last month, the agency had raised some Rp 11.12 trillion. The agency said that it planned to raise another Rp 2 trillion this month.

Elsewhere, Syahrial said that there were around 10 foreign and local buyers for the third tranche loan sale including Lazard Freres & Co., Rabo Bank, Deutsche Bank AG, Credit Suisse First Boston, local Bank Central Asia and Bank Danamon.

"The remaining unsold portfolios may be offered for sale in future tranches," he said.

IBRA has been criticized for its slow progress in the disposal of assets. Finance Minister Rizal Ramli said recently that out of the Rp 540 trillion worth of assets managed by the agency, only 20 percent had been sold so far.

President Abdurrahman Wahid recently installed I Putu Ary Suta as the new chairman of IBRA in a bid to accelerate the asset sale program. The government has planned to dissolve the agency in February 2004.

The previous IBRA chairman, Edwin Gerungan, planned to form two joint ventures with foreign financial institutions in a bid to help accelerate the restructuring and sale of its loan assets.

Asked whether the agency would proceed with the plan, Ary Suta said that he had to review the plan first before deciding whether to proceed or not.

Some senior officials at the finance ministry had earlier opposed the plan, arguing that IBRA's highly-paid staff were already more than sufficient to implement its mandate.(rei)