Mar'ie wants govt to close ailing banks

YOGYAKARTA (JP): Former finance minister Mar'ie Muhammad urged the government yesterday to close down ailing banks which could no longer be maintained without further financial help.

"Banks which are in the worst shape are better off closed. Their assets could be given to state banks," Mar'ie told a symposium of economic students at Yogyakarta's Gajah Mada University.

"If the government continues to help them, it would be a waste of public funds, when money for food supplies is more pressing right now," he said.

Mar'ie, who has become a staunch government critic since he left his ministerial post in March, said the government must also begin nationalizing some troubled banks to avoid a collapse in the banking industry.

He said the government had put a lot of money into the ailing banks.

The government, through the Indonesian Banking Restructuring Agency (IBRA), has injected Rp 102.5 trillion (about US$10.25 billion) into ailing banks as of May 22 since its establishment in January, according to Bank Indonesia, the central bank.

"Don't close the door on the possibility of nationalizing the banks, like those which have had massive runs on them but which are still relatively healthy," he said.

But the government must be cautious in determining which banks are still healthy, which need to be nationalized and which are no longer salvageable, he said.

"Like a dying person, some troubled banks can no longer be worked on by being placed in intensive care when they are eventually going to die anyway," he said.

Hordes of customers of the country's largest private bank, Bank Central Asia (BCA), have been withdrawing their money, following three days of riots two weeks ago which severely damaged many of its branches and automatic teller machines.

Yesterday IBRA took over the control of BCA, owned by the giant Salim Group and two of Soeharto's children, after financial assistance from both owners and the central bank failed to calm jittery depositors.

Earlier this year, IBRA shut down seven commercial banks and placed another seven under its management, including large Bank Danamon and Bank Dagang Nasional Indonesia,

Later, 26 other banks were put under its supervision as part of efforts to overhaul the country's frail banking sector.

Earlier in his speech, Mar'ie called on intellectuals, especially the campus community, to keep alive the campaign for overall reform because the drive was in danger of being shattered by vested groups with their own agenda.

"We should keep up the momentum for reform, otherwise the new administration will be able to establish a power base and maintain the status quo," added Mar'ie, who was known as "Mr.Clean" in the 1993/1998 Cabinet. (23/das)