Robert Go, Jakarta – President Megawati Sukarnoputri's economic team shows signs of wear and tear after six months in office, as Cabinet members slug it out over a controversial debt-extension deal for Indonesia's conglomerates and whether to sell Bank Central Asia (BCA), the country's largest retail bank.
Outspoken National Development Minister Kwik Kian Gie has been against both proposals and has already hinted he would resign from the Cabinet if the government implements policies that compromise his principles and cause further financial losses to the state.
Standing at the other corner is Mr Laksamana Sukardi, another trusted Megawati aide and a highly respected anti-corruption crusader who is now the minister in charge of Indonesia's privatisation programme.
Both Mr Kwik and Mr Laksamana declined to comment on the state of the economic Cabinet to The Straits Times yesterday. But their differences appeared critical enough to warrant a high-level meeting on Thursday of Ms Megawati's Indonesian Democratic Party-Struggle (PDI-P), to which they both belong.
On both issues, each minister has his own arguments. When it comes to BCA sale, Mr Laksamana has argued that the government has to sell it now in order to prop up the budget and to show international investors its ability to push through its asset-disposal programme.
The International Monetary Fund and other lenders to Indonesia have consistently urged the government to sell its nationalised assets, including banks such as BCA taken over in the aftermath of the 1997 economic crisis.
But Mr Kwik's objections, analysts say, also have merits. BCA's survival depends on US$5.6 billion worth of government bonds, which could cost the government more than US$650 million each year in interest payments. Given that the government only expects around US$450 million from selling the bank, Mr Kwik argues that the sale would prove to be costly to the country. Indonesian Bank Restructuring Agency (Ibra), which is under Mr Laksamana's control, sparked the other hot issue with a proposal to give some of Indonesia's biggest debtors 10 more years to pay up.
Mr Kwik, long known for his aggressive stance against the country's conglomerate owners, has described the plan as "insane" and as yet another action that will cost billions of dollars worth of taxpayers' money for the sake of debtors.
Under the existing agreement between the government and debtors, all debts have to be settled by March 31, 2002. Those who fail to pay could face legal action.