Presidential decree on IBRA closure finalized: Dorodjatun

Presidential decree on IBRA closure finalized: Dorodjatun

Fabiola Desy Unidjaja and Dadan Wijaksana, The Jakarta Post, Jakarta

The Indonesian Bank Restructuring Agency's days are officially
numbered, as the drafting of a presidential decree on its formal
closure has been finalized, Coordinating Minister of the Economy
Dorodjatun Kuntjoro-Jakti said on Wednesday.

The IBRA will stop all its business, effectively shutting
down, on Friday.

"Consequently, there will be no transactions from Feb. 27
onwards on behalf of the IBRA," Dorodjatun said after a Cabinet
meeting. The meeting was also attended by the Minister of
Finance, Boediono, State Minister of State Enterprises Laksamana
Sukardi and Governor of Bank Indonesia Burhanuddin Abdullah.

During the meeting all the relevant institutions approved the
substance of the decree, Dorodjatun said.

Serving as a post-crisis ad-hoc state agency, the IBRA was set
up in 1998 to restructure various forms of assets taken from
ailing local banks, which had earlier received huge bailout
packages from the government. The IBRA was charged with selling
these assets back into private hands to eventually recoup the
public money lost.

With the IBRA managing a recovery rate of only 28 percent, the
country stands to lose most of the Rp 600 trillion spent on the
bank bailouts by the time the agency ends its five-year mandate.

When the IBRA closed, there were still unfinished affairs that
had to be resolved, Dorodjatun said. These included the audit of
the IBRA and its accountants, as well as an appraisal of the
IBRA's buildings.

As for the IBRA's unsold assets, valued at around Rp 40
trillion, the government has said it would first establish a team
mandated to select assets that were "free and clear".

Those assets would be managed and restructured by a new agency
to be set up under the Ministry of Finance.

It would consist of about 100 former employees of the IBRA and
would be supervised by the Financial Sector Policy Committee, a
grouping of senior ministers, Dorodjatun said.

"We expect by April to begin receiving reports from the team,"
he said.

Among those unsold assets are those formerly belonging to
large debtor Texmaco Group.

Another special unit is also planned to take over the role of
the IBRA in implementing the blanket guarantees on bank deposits.

The unit would operate on a temporary basis -- pending
the establishment of a deposit guarantee agency (LPS).

Deliberation of a law that sets up the agency is underway at
the House of Representatives.

The cost of the financing the bank bailouts has hit the
government's state budget hard during the past six years.

This year, the budget allocates Rp 62.4 trillion to service
domestic debts resulting from the bailouts. That amount
represents more than 20 percent of full-year tax revenue.

Meanwhile, IBRA chairman Syafruddin Temenggung said that the
agency had already collected some Rp 5 trillion in cash to help
finance the current state budget deficit.

"As of today, we have handed over to the government around Rp
5 trillion in cash," he told reporters.

Some of the proceeds came from the sale of a majority stake in
Bank Lippo, and remaining minority shares in Bank Central Asia,
Bank Danamon, Bank Internasional Indonesia, and Bank Niaga.