Internal conflict threatens IBRA revenue target
JAKARTA (JP): Drastic restructuring measures introduced by the new leadership of the Indonesian Bank Restructuring Agency (IBRA) to improve the agency's efficiency has left the agency mired in internal conflict, which analysts say could threaten its ambition to meet 2001 revenue target.
IBRA chairman I Putu Gede Ary Suta admitted that he faced resistance from people within the agency in his effort to revamp the organization.
But he is optimistic that IBRA will be able to meet its revenue target of Rp 27 trillion (about US$3.1 billion) for this year.
"Clearly some people are offended by what I am doing.
"Cash flow-wise I am confident we can raise the Rp 27 trillion by the end of the year," he told The Jakarta Post in an interview last week.
Since his appointment as IBRA chief by former president Abdurrahman Wahid in late June, Ary Suta has embarked on a mission to boost the agency's efficiency.
IBRA is in charge of selling assets it took over from the ailing banking sector hit by the 1997 economic crisis.
Controlling some Rp 600 trillion (about $68.72 billion) in assets, IBRA's success in selling them is the key to putting the country's economy back on track.
Ary Suta has moved to streamline IBRA's decision-making process, cut the overriding presence of consultants and to accelerate asset sales.
The restructuring measures will enable the agency to cut its budget spending to Rp 1.7 trillion this year from the initial budget allocation of Rp 3.1 trillion, he claimed.
He did not detail the spending cuts, but said the bulk would come from slashing the number of consultancy firms working for IBRA.
He later told a media meeting that he had cut three major consultancy firms from IBRA's payroll.
They are state owned consultancy firms PT Danareksa Securities and PT Bahana Securities, and the Indonesian unit of Lehman Brothers Inc.
Ary Suta accused the three of outsourcing their work to other consultancy firms, a practice he called unethical and costly.
Although effective in shoring up public support, analysts warned, the restructuring introduced by Ary Suta would affect IBRA's ongoing work flow.
With only some Rp 14 trillion in revenue obtained so far, the agency is under pressure to reach its revenue target of Rp 27 trillion within four months.
However, Ary Suta dismissed claims that the restructuring had stalled the agency's asset sales and debt restructuring program.
He said he was speeding up asset sales to meet the revenue target, including the sales of eight companies formerly owned by the Salim Group.
Among them is publicly listed television broadcasting company PT Indosiar Visual Mandiri. IBRA expects the biggest gain from selling 49 percent of its 57.26 percent stake in the company.
Banking analyst and former IBRA Ombudsman member, Pradjoto, said he had heard that IBRA officials had become demoralized after Ary Suta took over and had "centralized" decision-making.
"They (IBRA officials) just abandoned their work and left everything to him (Ary Suta)," he said.
"IBRA should be restructured, but I disagree with Ary Suta's way of centralizing decisions," he told the Post.
IBRA deputy Irwan Siregar was quoted as saying by Bloomberg that many asset sales and debt restructuring proposals were left untouched by Ary Suta, a claim the latter refuted.
"If there was indeed no work, how is it then that we still receive money?" Ary Suta argued.
Pradjoto added that Ary Suta should have refrained from criticizing his own men before an open forum.
Ary Suta must realize that he would not be able to meet the Rp 27 trillion revenue target without the full support of IBRA officials, he said.
Ary Suta should also realize that as an official installed by the previous government, he also faces the risk of being dumped by the new government.
"It's custom for a new government to place its own people in important positions of a bureaucracy," he said.
Pradjoto said it was very likely that individuals within IBRA would step up attempts to drive Ary Suta out of office.
But maneuvers like these, he warned, will come at the expense of IBRA revenue.
"It's high time that the government decided whether to keep Ary Suta or replace him," Pradjoto said.(bkm/jsk)