IBRA to speed up Indonesia's economic recovery
Dadan Wijaksana, The Jakarta Post, Jakarta
Newly-installed Chairman of the Indonesian Bank Restructuring Agency (IBRA) Syafruddin Temenggung aims to boost the role of the agency in accelerating the recovery of the country's economy.
While admitting that the agency has been slow in nurturing the banking sector back into financial health -- which will make it the catalyst for recovery -- Syafruddin stressed that efforts could be done to speed up the process.
"IBRA was established with the main goal of being the agent of (economic) recovery. So, we have to make that happen before, or at least, at the same time IBRA's mandate expires," Syafruddin said on Tuesday.
He also vowed to apply a working system that is consistent with good corporate governance (GCG).
GCG essentially means that each action and decision taken should be transparent, liable and accountable to avoid disorder and abuses of power.
Syafruddin was speaking to reporters during his first formal press conference since he was named last week as the new chief of the powerful agency, replacing I Putu Gede Ary Suta, who had been criticized particularly by State Minister of State Enterprises Laksamana Sukardi for being too aggressive in meeting state budget targets at the expense of transparency.
Laksamana's ministry oversees IBRA.
IBRA, set up in 1998, has until February 2004 to complete its job. It took over some Rp 645 trillion (about US$64 billion) worth of assets from troubled banks and indebted ex-bank owners. It is mandated to restructure the assets and sell them to investors to accelerate economic recovery.
With IBRA now controlling the ailing banking sector, restructuring them would be significant in improving their intermediation functions to industries, thereby theoretically enabling the country's economic wheels to get rolling again.
The government, through IBRA, issued a huge amount of bonds in the late 1990s to help the banks, which was one of the most costly bank bailout programs ever. This has also made IBRA the majority owner in the banks. The agency now must restructure this group of banks and put them on the road to better health.
However, after more than four years of existence, IBRA has yet to succeed in bringing the banking sector to where it is supposed to be.
Critics have argued that the agency has been too focused on its efforts to sell off assets in a bid to reach state budget targets, the proceeds of which are to be used partly to offset the huge government deficit.
That has put bank restructuring, which is in fact the reason for IBRA's existence, far behind schedule.
According to Syafruddin, the bank restructuring had been slow also due to an unending debate on how to settle the obligation of indebted former bank owners to the government.
"That debate has been time consuming. We have spent almost all our energy ...," Syafruddin said.
Syafruddin was the secretary of the powerful Financial Sector Policy Committee (FSPC), which groups senior economists and has the final say on IBRA's major bank restructuring and asset sales programs.
The former bank owners owe around US$10 billion in debts to the government after their banks received liquidity support in the wake of the 1997 financial crisis.
But most of these once powerful owners have been uncooperative in settling their obligations.
Ary Suta had been widely criticized for proposing a restructured repayment plan which clearly favored the ex- bankowners.
The progress of the case is now in the hands of a team of legal experts, who are tasked to research each of 33 uncooperative debtors -- former bankers -- and to provide recommendations on what legal measures can be taken against them.