New IBRA boss

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.