Internal conflict threatens IBRA revenue target

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)