More than 100 institutional investors have shown interest in buying some of the US$62 billion in assets managed by the Indonesian Bank Restructuring Agency (Ibra) at a roadshow in Hong Kong last week. Agency vice-chairman Arwin Rasyid said the positive response from investors revealed their confidence in the Indonesian economy.

The drastic depreciation of the rupiah in late 1997 drove away investors and the financial crisis caused serious damage to the economy and banking sector. The agency was set up under the Ministry of Finance in 1998 to carry our banking reform and to sell the assets of debtors or shareholders of the troubled banks. The assets to be sold include property, shares of companies, and office equipment. The disposals are aimed at raising funds to strengthen the capital of the banks and to pay back government funds used in their rescue.

Indonesia is relying on the asset sales to help plug a 44 trillion rupiah (about HK$38.3 billion) deficit for the year. Amid criticism from the International Monetary Fund over delays in the sale of the agency's stakes in banks, the Indonesian parliament last week voted to put off the sale of Bank Central Asia until next year due to fears it might not fetch a high price on the market.

Concerns over a lack of progress in the restructuring of the economy have made investors wary about buying Indonesian assets. Last week, Mr Rasyid led a delegation to Singapore, Hong Kong and Tokyo to meet potential buyers and present the assets it wants to sell. "Our purpose is to sell, sell, sell," Mr Rasyid told the Business Post.

During the roadshow, Mr Rasyid and other agency representatives met about 200 potential buyers of which about half indicated an interest in the assets. They were mainly long-term investors including fund managers, insurance companies, pension companies, institutional investors and some listed companies.

Mr Rasyid said investors exhibited more interest in this year's asset sales than at last year's roadshow. "The Asian economy has shown signs of recovery and investors are interested in investing in Indonesian assets again," he said.

Mr Rasyid said during the crisis, bad loans at Indonesia's banking institutions were valued at US$65 billion, representing 60 per cent of the country's gross domestic product last year. In comparison, a banking crisis in the United States in the mid- 1980s saw bad debts rising to US$185 billion – three times Indonesia's level – but this was equal to only 5 per cent of GDP of the US in the 1980s, he said.

The agency manages three categories of assets. The first is the shareholdings of 13 banks taken over by the Indonesian Government after the financial crisis, worth US$15 billion. Second is the US$32 billion in troubled bank loans transferred to the agency from the 68 banks undergoing restructuring. Third is US$15 billion in assets surrendered by shareholders of the troubled banks to the Indonesian Government as a way to repay the bank debts. This has brought US$62 billion of assets under the agency's umbrella.

Mr Rasyid said the Indonesian Government hopes these assets will be sold before 2004. He refused to predict how much money could be raised from the asset sales. However, he admitted it might be hard to find buyers for some of the banking assets.

Mr Rasyid said the sales process, which started last year, had been smooth. The agency aims to sell US$2.2 billion in assets this year, and in the first nine months it has sold US$1.4 billion in assets. Mr Rasyid was confident that the agency would be able to meet the target.

Meanwhile, Ibra is in the process of selling shares in 16 companies. In the nine-month period, the agency has also sold shares of Hong Kong-based and listed First Pacific Group, Indonesia-based companies including car-maker Astra International, Wisma BCA, Karimun Granite, Aetna Insurance and Dananmon Sanatel. Last year, shares were sold in Indofood and Indo American Ceramic. These sales brought US$615 million into agency coffers.

Mr Rasyid said the agency's sales of its entire 8 per cent stake of First Pacific spread out over August and this month on the Hong Kong stock market garnered US$70 million.

First Pacific is the only locally listed company whose shares are held by the agency. The stake was surrendered by the conglomerate's parent company, Salim Group, to cover debts owned by the group's troubled banking arm – Bank Central Asia.

First Pacific is a Hong Kong-based conglomerate operating in consumer products, telecommunications, property and banking. After the sales, the agency will no longer holds shares in any locally listed companies.

Despite this, Mr Raysid said Hong Kong was an important market for the agency due to the high number of potential investors willing to invest in the assets it provided.