Tim Dodd, Jakarta – Indonesian President Abdurrahman Wahid yesterday sacked a key economic official over the snail-like pace of banking reform, which is becoming a drag on economic recovery. The head of the Indonesian Bank Restructuring Agency, Mr Glenn Yusuf, will be replaced today after a nightmare six months for the agency in which its officers have been implicated in a corruption scandal and it has made little progress in liquidating the assets of failed banks.
Mr Yusuf's former job is one of the most important economic posts in Indonesia as the agency holds more than $100 billion in assets which were taken over from failed banks.
Its task is to manage the assets and then sell them to offset the $140 billion cost of injecting new capital into Indonesia's surviving banks.
But it is likely to fail to meet even the modest target of raising $4 billion by this March.
Even worse for Mr Yusuf, agency officials were involved in the Bank Bali scandal that tarnished the clean image needed to close deals with foreign investors, who are now very wary of corruption in Indonesia.
Mr Yusuf has a clean reputation but was unable to control some of his officers. Two of his deputies were arrested for their involvement in the scandal, in which about $120 million in funds meant to help recapitalise Bank Bali ended up in a political slush fund linked to associates of the then-president, Dr B.J. Habibie.
Last November President Wahid put the bank restructuring agency under direct presidential control and appointed Mr Cacuk Sudarijanto to a new position as the senior deputy to Mr Yusuf.
The Government announced yesterday that Mr Cacuk would be Mr Yusuf's successor, but the market greeted the appointment hesitantly.
The Jakarta Composite Index was down 1.1 per cent in afternoon trading, which was partly attributable to uncertainty about Mr Cacuk.
Mr Yusuf is well respected by the market and his demise is viewed as the result of a political struggle within the Government.
Another cause for business concern is that Mr Cacuk is linked to the former minister for co-operatives in the Habibie government, Mr Adi Sasono, who was an advocate of reviving the economy by redistributing resources to small businesses and co-operatives.
Analysts estimate that about 40 per cent of Indonesian production is now controlled by the bank restructuring agency, which has wide powers to seize assets and liquidate defaulting companies.
Yesterday the Government also replaced the head of the State- owned electricity utility, PLN, which was found in a recent audit to have been losing more than $1 billion a year through mismanagement and inefficiency. The new chief is former mines and energy minister Mr Kuntoro Mangkusubroto.
The Government is still trying to remove the governor of the central bank, Mr Syahril Sabirin, who is responsible to Parliament rather than the Government.