Megawati asks IBRA to speed up asset sale

JAKARTA (JP): Vice President Megawati Soekarnoputri has told the Indonesian Bank Restructuring Agency (IBRA) to speed up the sale of various banking assets under its control, Finance Minister Rizal Ramli said on Friday.

Speaking to reporters following a Cabinet meeting chaired by Megawati, Rizal said that the agency had so far only managed to sell around 20 percent of the total assets under its management, which are estimated to be worth around Rp 540 trillion (US$47.56 billion).

"In the meantime, the value of the assets has been declining steadily," he said.

Rizal added that the Vice President warned IBRA that it must complete the asset disposal program before the government dissolved the agency in 2004, as planned.

IBRA, a unit under the finance ministry set up in 1998, received various types of assets, including massive non- performing loans (NPLs) from the country's troubled banking sector and former bank owners as repayment for debts owed to the government.

The agency is mandated to restructure and sell the assets to raise cash that will help finance the state budget deficit.

The agency is expected to raise some Rp 27 trillion in cash this year to help finance the budget deficit, estimated to reach 3.7 percent of gross domestic product (GDP). So far, however, the agency has only raised around Rp 8 trillion.

The International Monetary Fund (IMF) has often criticized IBRA's slow asset disposal. The IMF has said that the quick sale of IBRA assets would help revive investor confidence in the economy.

The agency was supposed to have already sold a majority of the government shareholding in publicly listed Bank Central Asia (BCA) and Bank Niaga last year, but the plan was canceled citing unfavorable market conditions.

The delay prompted the IMF to also cancel the disbursement of a crucial loan tranche to the country.

IBRA is set to complete the sale of its BCA shares this month and the Bank Niaga shares later this year.

Analysts have said, however, that the restructuring of NPLs and sale of assets under IBRA's control have been slow, partly as a result of strong political interference.

One prominent case involved the recent sale of 25 palm oil plantations to Malaysia's Kumpulan Guthrie Bhd. The deal nearly collapsed following massive criticism from legislators and domestic associations, who claimed that the deal was not in the nation's interests.

The deal was only made possible following high level political lobbying.

Elsewhere, Rizal said that the government was still studying the plan by IBRA to form joint ventures with foreign investors to speed up the restructuring of NPLs and the sale of restructured loans. (rei)