IBRA set to miss Rp 17t target if political woes last

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA) will lose out in the sale of assets under its control if the political situation deteriorates after the presidential election, agency deputy chairman Arwin Rasyid said on Wednesday.

He said he was "optimistic" a Rp 17 trillion (about US$2 billion) target could be met if there was an improvement in the political climate after the November presidential election.

"But if it (political uncertainty) drags on until January, we're pessimistic," Arwin said.

IBRA targeted raising a minimum Rp 17 trillion in the current fiscal year ending in March 2000 to help finance the bank restructuring program. The agency has so far raised some Rp 8 trillion from the sale of various assets in its possession.

The agency controls hundreds of trillions worth of assets surrendered by ex-owners of banks to repay their debts to the government and heads of companies which defaulted on loan payment at banks now under its control.

The bank restructuring program is estimated to cost some Rp 600 trillion. The government has so far issued bonds worth more than Rp 150 trillion in the effort to finance the program. Interest payments for the bonds issue are estimated at Rp 34 trillion in the current fiscal year, half of which is expected to be covered by IBRA.

Indonesia is scheduled to hold a presidential election either in late October or early November. Political tension is rising throughout the country as politicians lay out their agendas.

President B.J. Habibie is striving to remain in power despite calls for him to pull out from the presidential race in the wake of the East Timor debacle and the Bank Bali scandal in which several of his aides and IBRA officials are implicated.

Habibie faces a tough challenge from Megawati Soekarnoputri, chairwoman of the Indonesian Democratic Party of Struggle (PDI Perjuangan), which won the June general election with some 34 percent of the vote. But the party lacks the majority vote to ensure Megawati becomes the next president.

"Foreign investors are currently taking a wait-and-see stance," Arwin said.

He said that political stability was crucial for foreign investors to return to the country.

Meanwhile, analysts and businessmen said the Bank Bali scandal would hinder the bank restructuring program.

IBRA deputy chairmen Pande Lubis and Farid Harianto have been named suspects in a police investigation of the case. The House of Representatives recommended that Habibie suspend agency chairman Glenn S. Yusuf because of direct or indirect involvement in a dubious commission paid by the bank and subsequent dealings.

"People at IBRA are now afraid to make decisions," said chairman of the Indonesian Chamber of Commerce and Industry Aburizal Bakrie.

Economist Faisal Basri concurred that "they tend to be nervous of signing new decisions. They're afraid of ending up like Farid".

In a related development, Arwin said that international auditor Ernst & Young would not be able to complete the verification process of interbank claims on closed banks by the original deadline of mid-October.

"They need additional time of four weeks to six weeks because there are many items to be checked," he said.

The agency appointed Ernst & Young to audit some Rp 15 trillion in interbank claims made by 10 banks on liquidated institutions to determine their eligibility for reimbursement by the government under its blanket guarantee program. (rei)