Investors express 'bullish' tone on Indonesia: IBRA

JAKARTA (JP): Some 18 strategic and portfolio investors plan to bid for 12 companies now in the hands of the Indonesian Bank Restructuring Agency (IBRA) despite the uncertainty caused by the upcoming June general election, according to agency chairman Glenn S. Yusuf.

Speaking from New York on Tuesday, Glenn said IBRA expected to raise between Rp 4 trillion and Rp 5 trillion (around US$625 million) in four to six months time from the sale of the fixed assets pledged by bankers to repay their debts to the government.

He said the assets came from six sectors, including banking, automotive, chemical and property.

He said some of the investors were planning to come to Jakarta in the next few weeks for further discussions.

"They're very bullish on Indonesia. They say the economy has reached the bottom and is now turning around," he said.

Glenn said one investor had specifically showed interest in one local company and had thoroughly checked the company's numbers.

Glenn said investors were encouraged by the positive developments in the country's macroeconomic indicators.

"What surprised me was that interest in the property sector was strong," he said, pointing out that many though this sector would be the last to recover.

He said investors are not jittery over the upcoming June general election.

"They know the Indonesian Military is well-organized and can handle the situation. They also see that the economic platforms of the major political parties are probusiness," Glenn said.

Indonesia is to hold a landmark general election on June 7. It will be the country's first free and fair elections after more than 32 years under the authoritarian rule of former president Soeharto.

IBRA officials are in New York as part of the agency's road show. They have visited Singapore, Hong Kong and London, and will travel to Boston and Tokyo after leaving New York.

The primary goal of the trip is to explore foreign interest in the various assets controlled by IBRA and to explain to investors the country's key economic reform programs, Glenn said.

IBRA has taken over some $10.4 billion in corporate assets in 215 companies from the owners of the nine banks the government closed and the two banks it took over last year.

The bankers surrendered the assets to repay over Rp 145 trillion in liquidity support injected by Bank Indonesia last year to bail out the ailing banks.

The agency also has taken over at least Rp 220 trillion in nonperforming loans from the 11 private banks and seven state banks to be recapitalized by the government this year and the 38 banks closed by the government in March.

IBRA is expected to raise Rp 17 trillion from the sale of the assets in the current 1999/2000 fiscal year ending in March. The money will help finance the bank recapitalization program.

Glenn said interest in buying the nine private banks to be recapitalized by the government was particularly strong due to the recent landmark deal reached by United Kingdom-based Standard Chartered Bank and PT Bank Bali.

"You know how bankers are; if one makes a move others will follow suit," he said.

The government plans to issue bonds to finance the recapitalization program, which will cost up to Rp 500 trillion according to estimates.

Glenn said investors also were showing interest in buying the bonds.

"Investors like the idea that the bonds will be tradable because they would provide a yield curve which would become a benchmark (for fixed investment in the country)," he said.

Fund managers in New York gave a positive response on Monday to IBRA's road show, Dow Jones reported.

Organizers said they were encouraged by the attendance of some 60 investors following a turnout of around 40 investors at a presentation last week in London.

IBRA secretary Christovita Wiloto said the agency expected a bigger reception in Asia and that the New York and European presentations were aimed at a smaller group of fund managers who did not have Asian branches. (rei)