Shake-up at IBRA

Firing the second-highest executive of the agency that holds the key to Indonesia's economic recovery while he was overseas leading a road show to attract investors was the last thing President Abdurrahman Wahid needed to do to improve the credibility of his economic crisis-management system. The President's abrupt decision last week to replace Arwin Rasyid as vice chairman of the Indonesian Bank Restructuring Agency will only strengthen the market's perception that his management system is erratic, at best.

The timing and unclear reasons for the dismissal of Arwin after only about 10 months in his position, and strong rumors of the imminent replacement of Cacuk Sudarijanto as IBRA chairman, though weakly denied by the President's spokesman Wimar Witoelar on Monday, will only cause more damage to the working spirit at the agency.

We thought the political struggle for control of IBRA, which holds more than Rp 600 trillion (US$68.2 billion) in state assets, or as much as 40 percent of gross domestic product, ended when Abdurrahman moved last November to make the agency answerable only to him. But the top management at IBRA seems to remain highly vulnerable to squabbles within the political elite.

Bambang Subianto, the first chairman of the agency that was set up by then president Soeharto in late January 1998, served for only about two months. Bambang Subianto's successor, Iwan R. Prawiranata, survived for approximately three months. The third chairman, Glenn M. Yusuf, served the longest tenure, weathering a turbulent 18 months. Cacuk, whose status is now highly uncertain, was appointed only last December.

Such instability and discontinuity in the top management is devastating to the capability of the agency to carry out its vital role of helping to lead the nation out of the economic crisis.

IBRA's tasks of salvaging the banking industry, resolving the huge corporate debt overhang and restructuring the paralyzed business sector requires not only strong leadership, but also some sort of continuity in management. Debt restructuring is a complex, time-consuming process.

How can IBRA management develop strong leadership if its key executives can be replaced anytime, without clear reason? If this tendency continues, key officials, who by the nature of their jobs will always face temptations from big debtors to "collude or corrupt", could opt for the easy way out, acting in very short- term interests at the expense of the national economy.

True, IBRA's performance is still way below expectations. Its bank and debt restructuring programs have always been far behind schedule and its asset recovery has always been far short of the targets. Its latest debt restructuring deals, involving more than $3.7 billion owed by four conglomerates, exploded into a controversy that spooked the international market and multilateral agencies, and could become a hot potato for Indonesia's delegation at the meeting of the Consultative Group on Indonesia creditor consortium in Tokyo beginning on Tuesday.

It is, however, not fair to pin all of the blame for this subpar performance on IBRA management. In addition to the instability of its management in the first seven months of its operations, the agency has been held hostage to political battles between various influential groups.

Abdurrahman's move to put IBRA directly under his control was initially hailed as the right step to protect the agency from vested political interests and to gradually develop it into an independent institution, able to perform freely its functions. But the President's latest tinkering with its top management once again proves how chaotic has been Abdurrahman's economic- management system.

Letting IBRA drift much longer will derail the nascent economic recovery. It is therefore imperative that the House of Representatives ask for the government's accountability regarding the agency. We are also utterly disappointed with the Oversight Committee of IBRA, which seems to serve only as a perfunctory body. The committee, consisting of independent experts under the leadership of Mar'ie Muhammad, a former finance minister who was known as "Mr. Clean" during the corrupt Soeharto regime, should be more assertive in exercising its authority, acting quickly and firmly to enforce the long-delayed good governance system at the agency.