Soedradjad admits failure over crisis

Soedradjad admits failure over crisis

JAKARTA (JP): Former Bank Indonesia governor J. Soedradjad
Djiwandono acknowledged that he failed to contain the monetary
crisis and restore confidence in the banking system.

Speaking to journalists after attending the ceremony to
install the new central bank governor, Sjahril Sabirin, at the
state palace yesterday, Soedradjad said he tried his best as the
head of the monetary authority to stop the economic crisis from
spreading.

"We continuously tried to tackle problems. But problems were
followed by other problems. And the rupiah is so weak now... I,
as a monetary authority, must nobly admit that those problems are
still here with us," he said.

He said the root of the problem was a diminishing public
confidence in the economic system, reflected in the continuing
weakening of the rupiah and in massive transfers of private
savings from domestic private banks to state or foreign banks and
from rupiah to U.S. dollars.

The other sources of the country's economic problems are a
weak banking system and large private foreign debts, Soedradjad
said.

"But now is not the time to blame each other. We, as a nation,
as an economy, are in trouble. I hope all parts of the economy,
be they in the monetary front, fiscal or real sectors, can
support each other so that we can survive this turmoil," he said.

Besides the monetary front, Soedradjad said, the new central
bank governor would have to pay more attention to the development
of the payment system and the improvement of banking supervision.

He said the first priority should be to restructure the
banking system so it could become strong and competitive.

When asked about the government plan to implement a currency
board system, Soedradjad said: "Whatever system we adopt, this
(banking reform) cannot be delayed because we have a banking
system which has grown so extraordinary."

Some analysts have speculated that Soedradjad's dismissal
before his term was due to his opposition over the government's
plan to adopt a currency board system.

But Soedradjad dismissed such speculation and said tenures of
minister-level officials should not always be the same.

Soedradjad's sudden dismissal follows a similar move in late
December 1997 when President Soeharto sacked three Bank Indonesia
directors: Hendrobudiyanto, Paul Soetopo Tjorkonegoro and Heru
Soepraptomo.

The three directors are being investigated by police for
alleged acts of corruption.

National Policy chief Gen. Dibyo Widodo said yesterday the
police might question Soedradjad in its corruption probe of the
three directors.

"If there is still an investigation, of course, there is still
a possibility," Dibyo said after signing an agreement with the
Capital Market Supervisory Agency.

When pressed by journalists on when Soedradjad would be
summoned by the police, Dibyo said: "Let's just wait for further
developments in the investigation." (cst/prb/rid)