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

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)