On IBRA's plan to form holding companies

The Indonesian Bank Restructuring Agency (IBRA) plans to propose the formation of two holding companies by the end of this year at the latest. According to IBRA chairman I Putu Gede Ary Suta, these companies will be required to manage IBRA's assets, as its term of operation ends in two years.

The plan is for the first holding company to manage IBRA's property assets, while the second is to accommodate IBRA's ownership (equity) in various companies.

Putu's statement answered some of the questions about what will happen after IBRA's termination, as there are worries concerning the likelihood that a number of problems might not be solved, such as the management of IBRA's wide-ranging assets.

The next question is whether forming such holding companies is the only way out. There are an enormous number of assets to be managed. There is a 16,000 hectare plot of land in Pulau Bintan, Putu revealed. More extensive studies need to be conducted, especially in the light of existing experiences.

Previously, IBRA had already formed a company with a similar function, Holdiko, which is handling Salim's assets under IBRA. However, Putu said that this time IBRA is preparing a concept to be submitted to the Fiscal Sector Policy Committee.

During preparation, there will be an opportunity to look into every aspect, for example on the scope of operation for each holding company, on its authority and who to report to.

The word is that both companies will function as sort of state-owned enterprises. If this is true, then today's reality has to be taken into account in so far as the dire urgency to reduce the current massive number of state-owned enterprises is concerned. It is common knowledge that the government's earnings are virtually worthless when compared to their assets and the effectiveness of their management leaves a lot to be desired.

Two years is certainly not a short period and many things can happen, good or bad. It does not mean that there is no opportunity to take a look from all sides before finally making a decision.

-- Koran Tempo, Jakarta