IBRA to be closed next year
Fabiola Desy Unidjaja and Dadan Wijaksana, The Jakarta Post, Jakarta
The government will close down the Indonesian Bank Restructuring Agency (IBRA) on Feb. 27 next year as scheduled, although the agency has yet to complete the difficult task of forcing big debtors to repay the state.
"A limited Cabinet meeting decided that the term of duty of IBRA remains as scheduled. So at the end of February next year, its task will end," Coordinating Minister for the Economy Dorodjatun Kuntjoro-Jakti told reporters after the meeting.
He said the Cabinet had ordered the National Police and the Attorney General's Office to prepare for a legal battle against the bad debtors.
Dorodjatun added that the government would speed up plans to set up a deposit insurance scheme to replace the existing government blanket guarantee scheme being handled by IBRA. Under the latter program, the government guarantees all obligations of closed down banks.
IBRA's remaining assets will be transferred to new holding companies. Dorodjatun said the Cabinet would meet again in January to work out the details of this plan.
IBRA was set up in early 1998 with a five-year term and tasked to clean up the country's messy banking sector, which was saddled with huge bad debts following the 1997 financial crisis.
The agency took over some US$60 billion worth of assets from failed or ailing banks. It is mandated to restructure and sell the assets, in the form of bank nonperforming loans and fixed assets surrendered by indebted former bank owners, to raise cash to help finance the state budget, which is heavily burdened by the huge cost of bailing out troubled banks.
IBRA, which has been led by seven different chairmen, has often faced strong criticism from the public for issuing controversial policies that appear to benefit big debtors.
The debtors included businesspeople with huge bad debts and former bank owners accused of violating banking regulations by channeling most of their banks' money to their own businesses and misusing government bailout funds at the expense of taxpayers.
Among the controversial policies were freeing some former bank owners from their past banking crimes and selling assets at huge discounts, which some critics said allowed the former owners of the assets to repurchase them at big discounts.
Some analysts have said that there must be a mechanism to make all IBRA top officials accountable for their policies.
But IBRA chairman Syafruddin Temenggung said that the agency had done its best to execute its mandated tasks.
He said the agency had posted a respectable recovery rate of 28 percent for the assets under its control, which was higher than the recovery rates of similar agencies in countries such as China (8 percent) and Thailand and South Korea (about 25 percent).
He also said the country's banking sector had been restructured and all the banks were healthy, with some having been even divested.
The agency has so far sold majority stakes in Bank Central Asia (BCA), Bank Danamon, Bank Niaga and Bank Internasional Indonesia (BII), and plans to wrap up the sale of controlling stakes in Bank Lippo and Bank Permata early next year.
List of IBRA's unfinished businesses
1. Still holds a minority ownerships in BCA, Danamon, Niaga, BII and other banks. A holding company is expected to be established to manage and sell these assets.
2. About Rp 43 trillion worth of bad loan assets, the majority of which come from five companies -- textile giant Texmaco (Rp 27 trillion), aircraft maker Dirgantara Indonesia (Rp 2 trillion), Bali Nirwana Resort (Rp 2 trillion), Tirtamas Group (Rp 3 trillion), Dipasena (Rp 4 trillion) -- are still unsold. A holding company is also expected to be established to manage these assets.
3. Of the 39 former bankers who agreed to settle their debts through various schemes (MSAA, MRNIA, APU), nine have been declared uncooperative and reported to the courts.