IMF urges IBRA to speed up asset sales

JAKARTA (JP): International Monetary Fund (IMF) Asia Pacific deputy director Anoop Singh has once again called on the Indonesian Bank Restructuring Agency (IBRA) to speed up the restructuring and disposal of its assets.

Singh said on Friday that the measure was crucial to help revive market confidence in the economy.

"Now the priority is to accelerate the restructuring and disposal of assets under IBRA to attract foreign investment and improve market sentiments," he said following a meeting with House of Representatives Speaker Akbar Tandjung.

The IMF has repeatedly asked IBRA, which controls banking assets worth US$66 billion, to speed up the disposal of its assets and not to wait too long to get a higher price.

The asset disposal rate at IBRA is relatively low at 2.5 percent compared to similar agencies in the region, including South Korea's KAMCO with an asset disposal rate of 38 percent, Malaysia's Danaharta (40 percent), and Thailand's FRA (78 percent).

IBRA has been targeted to raise Rp 18.9 trillion (US$2.18 billion) in cash this year to help finance the current state budget.

The agency has so far only managed to raise around Rp 2.8 trillion in cash.

IBRA has said that it is planning to sell between 14 and 20 companies this year, some through initial public offerings (IPO).

The agency sold its shares in the publicly listed auto giant PT Astra International this year and launched an IPO for Bank Central Asia (BCA) this year.

IBRA has said that it is planning to make a further divestment in BCA, and to sell its shares in the publicly listed Bank Niaga this year.

Elsewhere, Singh said that accelerating the implementation of the overall economic reform program was crucial to help revive investors' confidence in the economy.

He said that he had received a commitment from the government to accelerate the implementation of key economic programs, including bank and corporate restructuring and good corporate governance.

He also said that the current weakening of the rupiah was partly due to the low market confidence in the economy.

Since last month, the rupiah has been under strong pressure due to a combination of domestic political problems and the slow progress of the economic reform program.

The rupiah is now hovering at around Rp 8,700 per U.S. dollar compared to the government target of Rp 7,000 for this year.

The government has been criticized for dragging its feet in the implementation of the reform programs, agreed to together with the IMF.

Singh said that macroeconomic development over the past six months had been positive, and that the real challenge now was to maintain the positive growth.

"The key here is to accelerate the implementation of the economic reform program," he said.

Singh arrived last week for a two-week visit to review the country's economic reform program, and to help the government design a new letter of intent (LoI).

He said that the new LoI was expected to be finalized next month, paving the way for the third disbursement of IMF money.

The IMF agreed in January to provide the administration of President Abdurrahman Wahid a total of US$5 billion to help finance the country's three-year economic reform program.

The fund has so far disbursed $715 million in loans to the current administration.(rei)