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.