New IBRA boss

The appointment of a new chairman of the Indonesian Bank Restructuring Agency (IBRA) comes as no surprise. Rumors have been circulating for the last few months about antagonisms existing between the outgoing chief, I Putu Gede Ary Suta, and the State Minister of State Enterprises, Laksamana Sukardi, about IBRA's policies that appear to favor conglomerates and about conflicting political interests jostling for the more than US$60 billion worth of assets under the control of IBRA.

IBRA's new chairman, Syafruddin A. Temenggung, becomes the seventh IBRA chief within just four years. The question is, how long will he survive in his new position?

IBRA was set up in early 1998 to restructure failed or ailing banks which collapsed under huge bad debts caused by the drastic collapse of the rupiah during the second half of 1997. At least two parties were responsible for this collapse: first, the central bank, Bank Indonesia, which was supposed to supervise and control the banks, and second, the conglomerates, who either partly or wholly owned those banks, and used them for their own speculative business interests. This was a fatal mistake.

Presidential Decree No. 27/1998, under which IBRA was set up, and the ensuing Government Regulation (Peraturan Pemerintah) No. 17/1999, practically relieved those two parties of their responsibilities. The government (IBRA) took over their huge burden and IBRA was left to clean up the mess created by the incompetent supervising body, Bank Indonesia, and greedy conglomerates. The Indonesian taxpayers are supposed to pay the bill, which is yet another fatal mistake.

IBRA basically has two enormous jobs. First, to settle the huge bad debts which have incapacitated the banks. Second, to reinvigorate those banks so that they can perform their vital function in the country's economy. For both those jobs, the time schedule is set: the deadline is February 27, 2004.

The first job includes selling assets supposedly worth more than $60 billion. The going estimates of their market value vary between 15 percent to 40 percent. This is bounty for our notoriously greedy politicians. More than three years have since passed, and not even half of those assets have been sold.

The second job is no less important. Without a healthy banking system, it would be really hard to imagine Indonesia coming out of the current multidimensional crises. But nobody seems to care. We have only less than two years left before deadline and we have not seen any sign of a healthier banking system.

Temenggung probably will not be the last chief of IBRA before the deadline in 2004, and probably nobody will care. The relevant question is not who is appointed to chair the agency, but what the purpose of IBRA is in the first place. If it is supposed to be temporary, there should be a clear-cut policy of how the banking system should be developed to serve the economy of the country, and that policy has to become the guideline for IBRA. There has been none so far.

Whatever the case, it is not fair to impose the bill on Indonesian taxpayers while the central bank officials and conglomerates remain unaccountable.