Indonesia 'not ready' to privatize state banks in three years
Indonesia 'not ready' to privatize state banks in three years
JAKARTA (JP): Indonesia won't be ready to privatize its state
banks in three years time as demanded by the International
Monetary Fund, announced State Minister of the Empowerment of
State Enterprises Tanri Abeng.
He said on Tuesday that the privatization of the ailing banks
should be carried out within three to five years time to ensure
that it would achieve the best market price.
"We have to be realistic with our capability," he told
reporters on the sidelines of a privatization seminar organized
by the Club of Journalists covering the President's Office.
The country's seven state banks which include Bank Negara
Indonesia (BNI), Bank Rakyat Indonesia, Bank Bumi Daya, Bank
Ekspor Impor Indonesia, Bank Tabungan Negara, Bank Dagang Negara
and Bank Pembangunan Indonesia have been mired in huge sums of
non-performing loans (NPLs) caused partly by unsound,
politically-directed lendings for well-connected business groups.
The Indonesian Bank Restructuring Agency (IBRA) assumed over
Rp 100 trillion in bad debts of the seven banks.
Sorting out the bad debt mess has proven to be complicated as
IBRA has had to pass through political minefields set by the
well-connected businessmen which are believed to owe the bulk of
the NPLs.
The IMF pressed the government to reach a restructuring
agreement with 20 of the largest debtors of the state banks as
soon as possible or pursue bankruptcy proceedings against the
uncooperative debtors.
Indonesia's new "letter of intent" to the IMF, which will be
issued this week, will include new targets for the restructuring
plans for the debtors.
The IMF has been organizing a multibillion dollar cash bailout
for the crisis-hit economy.
But Tanri said that the targets set in the letter of intent
could only be implemented if they're realistic.
The restructuring of the debtors is expected to provide a
momentum for the overall restructuring of the real sector, which
is essential for the country's economic recovery and to ensure
success of the costly bank recapitalization program.
But key economic ministers seem to be divided over how to
restructure the debtors.
Finance Minister Bambang Subianto insisted that the government
wouldn't want to swap the debts of ailing companies with
government equity participation.
Bambang also turned down a proposal to provide debt reduction,
unless the debtors could make a one-time debt repayment
transaction.
Other ministers seem eager to bail out the ailing companies
through government equity participation considering the
businesses are strategic to the country, employ a large number of
people or are potential foreign exchange earners.
The debtors seem to have won the first round of fights to
prevent their businesses being liquidated or their names being
announced to the public.
IBRA deputy chairman Eko S. Budianto said last week that the
agency had to return to the state banks the management of
individual NPLs of less than Rp 25 billion.
The banks earlier demanded the government to return all their
NPLs already transferred to the asset management unit of IBRA,
arguing that they were better able to reach effective loan
workouts with the debtors.
But a government source said the IMF Asia Pacific director
Hubert Neiss who came to Jakarta last week turned down a loan
work strategy offered by Bank BNI and demanded the bank to make a
revision. Bank BNI is one of the state banks with the largest
amount of bad debts. (rei)