Major parties give nod to bank recapitalization

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)