Lippo's Riady backs govt action on troubled banks
JAKARTA (JP): Deputy chairman of the Lippo group James T. Riady hailed yesterday the government's move to freeze and nationalize several debt-ridden banks, believing it would help restore market confidence in the country's ailing banking industry.
James, who is also the government's special business envoy to China, Hong Kong, Taiwan, Australia and New Zealand, said domestic and international markets welcomed the action.
But he noted the government was still expected to follow up the measure by seeking accountability of the bank owners.
"The international and domestic markets must clearly see that, in the eyes of the government and the law, all are the same. If you do something wrong, the government will act upon it," James said on the sidelines of a business luncheon held by the Indonesian-Australian Business Council.
The government announced Friday various measures to clean up the chaotic banking sector, including to immediately freeze the operations of Bank Dagang Nasional Indonesia, Bank Umum Nasional and Modern Bank. It will also nationalize the giant Bank Central Asia (BCA) and Bank Danamon, and possibly Bank Tiara and Bank PDFCI.
The seven banks were earlier taken over by the Indonesian Bank Restructuring Agency (IBRA) after they received massive liquidity support from Bank Indonesia, amounting to more than 500 percent of their capital, to maintain operations.
Fifty-five of about 200 domestic banks are under the authority of IBRA.
Minister of Finance Bambang Subianto gave a Sept. 21 deadline to owners of BCA and Danamon for them to pay back the funds as a prerequisite for them to recoup command of their banks.
BCA is co-owned by the families of former president Soeharto and his longtime associate Liem Sioe Liong. Danamon is controlled by Usman Admadjaja's family.
Subianto earlier said the government would not control the nationalized banks, but restructure them before selling them to investors through private placements or the stock market.
Reject
James contended the government should deny the owners of the nationalized banks the chance to regain the institutions since their presence would do nothing to rebuild market confidence in the banking sector.
"The public's confidence will not be restored if the banks are returned to the former owners."
James, who is also a commissioner of the publicly listed Lippo Bank, argued that dozens of the country's banks remained healthy and liquid despite the more than a year-long monetary crisis.
The government should give the banks the chance to strengthen themselves amid the crisis to anticipate future competition with foreign banks in the country's increasingly transparent and liberalized market, he added
He predicted that the crisis, whose effects began to be felt in August last year, would bottom out in two years or three years and the country's economic recovery would start in four or five years.
Indonesia needed consideration from developed countries like the United States and Australia to regain its economic growth, he said at the luncheon chaired by former Indonesian ambassador to Australia and council president Sabam Siagian.
He said many sectors were still promising for Australian businesspeople amid the crisis, including natural resource-based industry, the financial service industry, agricultural sector and education sector.
"Indonesia's prospects are still bright in the middle and long term."
Also yesterday, the Legal Aid Foundation urged the government to follow regulations in compensating employees of the liquidated banks.
Bank Dagang Nasional Indonesia, Bank Umum Nasional and Bank Modern reportedly have 15,000 workers nationwide.
Some will continue to be employed for administrative work until October.
Head of the foundation's workers division, Teten Masduki, said the amount of severance pay should be determined through discussions between the banks' management and workers under mediation of the Ministry of Manpower. (jsk)