IBRA upbeat on meeting new revenue target

The Jakarta Post, Jakarta

The Indonesian Bank Restructuring Agency (IBRA) is confident that it will be able the meet the new proceeds target set by the government for next year, provided that the investment climate improves.

"We will do our best to achieve the new target. But there has to be a conducive business climate for investors to support that. What happened in Bali should not happen again in this country," IBRA spokesman Reymond Van Beekum said on Thursday, referring to the recent bomb attacks on the resort island.

Reymond added that unless the government swiftly addresses security problems in the country, it would be hard for anyone to convince foreign investors to come and invest here.

He was responding to reports that the government had raised the agency's revenue target to Rp 18 trillion (some US$195 million) from Rp 12 trillion, to help cover next year's deficit, which was projected at Rp 36.6 trillion, up from the initial figure of Rp 26.3 trillion.

The new target is part of the revisions to the 2003 state budget draft by the government following the Bali bomb attack.

Citing government documents, Reuters reported on Wednesday that the government had revised upward the 2003 budget deficit to 1.9 percent of the country's gross domestic product (GDP), from 1.3 percent in the first draft budget presented to the House of Representatives prior to the Bali bombing.

The higher deficit was caused by, among other things, the government's plan to raise development spending as an economic stimulus to contain the fallout of the Bali bombing.

Under the revised draft budget, the revenue target from the privatization of state-owned companies remains unchanged at Rp 8 trillion, according to Reuters.

Aside from the assets sales by IBRA and privatization, the government expects loans from donor countries to help plug the higher budget deficit.

Under the revised draft, foreign financing would also be increased from Rp 9.4 billion to Rp 12 trillion.

Reymond said that the agency would still pin its hopes primarily on proceeds from banks' divestment programs to meet the target.

Next year, IBRA is expected to sell Bank International Indonesia (BII) and Bank Patriot (resulting bank from five banks that have been merged).

It is very likely also that the sale of the two banks scheduled to be divested this year will be carried over to 2003. The two are Bank Danamon and Bank Lippo.

IBRA is currently finalizing the preparation for the sale of Danamon, but it would be difficult to finish it off this year, with two months remaining, analysts say.

IBRA took over more than Rp 600 trillion worth of assets in 1998 from bad bankers and is tasked to restructure them before returning them to private hands.

However, the need for the government to collect as much revenue as possible to help finance its cash-scrapped annual budget has made IBRA concentrate only on selling the assets, rather than restructuring them first.

As of October, IBRA's asset sales have contributed some Rp 40 trillion to the government's coffers, not too far away from this year's target of Rp 42.8 trillion.