Major parties give nod to bank recapitalization

JAKARTA (JP): Four major political parties have come out in support of the government's massive bank recapitalization program, saying it is crucial in helping the country emerge from its worst economic crisis of recent years.

However, most of them disagreed with the government's handling of the program, set to cost taxpayers over Rp 350 trillion (about US$43.75 billion) to keep the debt-ridden institutions afloat.

Faisal Basri of the National Mandate Party (PAN) said he regretted the government's lenient stance toward troubled banks backed by strong lobbying.

He said many institutions should have been shut down but were kept alive due their owners' close ties with the government.

"The government gave too many compromises in the bank restructuring, and this made the process so slow," he said at a dialog on the political parties' economic vision, which was broadcast by privately owned television station Indosiar on Friday night.

He said the government should only allow between 25 and 50 banks to operate to ensure a good and strong banking system in the country.

"There are many weak banks out there which survived the government's compulsory bank closures," Faisal said.

The Ministry of Finance issued on Friday Rp 157.61 trillion worth of bonds to recapitalize 23 banks.

The bonds will be used to recapitalize seven private banks, four banks taken over by the government last August and 12 provincial banks.

The government says the total cost to recapitalize all of Indonesia's banks -- as of March 31 -- is Rp 351.625 trillion, up 17.2 percent from its original estimate of Rp 300 trillion. Of this, Rp 233.294 trillion will go toward recapitalizing Indonesia's struggling state banks.

Sayuti Hasibuan from the United Development Party (PPP) said that the bank recapitalization, as part of the bank restructuring program, would help the nation shrug off the prolonged crisis.

"Our banking system should be nation-oriented, instead of Jakarta-oriented. It is shameful that 70 percent of the total bank loans are given in Jakarta," he said.

Supriyatno from the People's Sovereignty Party (PDR) also agreed that the bank recapitalization should proceed to heal domestic banking, adding that the agriculture sector should get the most attention when the process was completed.

"A sound banking environment, when regained later, should be directed to giving more attention to the agriculture sector where most Indonesians earn a living," Supriyatno said.

Eki Sachruddin of the Golkar Party concurred with his counterparts, saying that bank recapitalization was needed because the economy required sound banks.

He said banks should pay more attention to small businesses following the restructuring.

"It is all right to discriminate in favor of the poor and the neglected. However, this should be rightly done through the market economy,"

PAN, PDR, Golkar and PPP, which are considered front-runners among the 48 political parties contesting the June general election, also gave their views on other economic issues.

Eki said that the country's future economic policy should be based on its competitive edge, such as abundant national resources, cheap labor and a high population.

"Indonesia is a sizable market, at a geographically strategic location that is abundant with natural resources," Eki said.

Sayuti stressed that economic growth based on human resources was needed.

"What is good is growth based on human resources, not based on foreign aid," he said.

Sayuti also urged the military to relinquish its business ties and return to its traditional role of national defense.

Supriyatno stated that the government should free state-owned enterprises of subsidies because other parties were more in need of the benefits.

"Small and medium business are parties that deserve more attention, because from these sectors the strong basis for the country's economy will arise," he said.

Faisal said that economic recovery in other Asian countries proceeded a lot faster than Indonesia because of their "consistency".

"Consistency here translates as free of politically driven compromise that can change the already approved and committed government action plan or regulation," he said.

"I remind you that we cannot expect too much as we are now, under Habibie, under an extension of the last regime." (udi)