Robert Go, Jakarta – Indonesia's Finance Minister said yesterday the government would demand more payments from indebted conglomerates following news that assets currently managed by the country's restructuring agency were worth only 167.7 trillion rupiah now, or a quarter of their value in 1999.
Finance Minister Rizal Ramli said: "Personal guarantees from debtors are crucial in case something like this happens. I have suggested before that debtors hand over bid to recover losses incurred during the financial cri- sis by announcing that assets under its care were now worth much less than thought previously.
The agency said in a statement: "As of December 31, 2000, the fair value only reached 167.7 trillion rupiah. The asset value ... was previously estimated at 645.8 trillion rupiah." New Ibra chairman I Putu Ary Suta said: "If this figure is used as a benchmark, the potential recovery rate from Ibra assets is only 26 per cent." Parliament had previously told the agency to aim for a 70 per cent recovery rate of the money used to rescue, restructure and sell off banks and other assets under its management.
Ibra is tasked with managing assets that debtors transferred to the government as payment for the approximately 600 trillion rupiah spent bailing out ailing banks and other financial institutions since the 1998 economic crisis. Since the beginning of this year, the agency has raised 11.3 trillion rupiah, nearly half of its 27 trillion rupiah target for 2001.
Ibra is often described as an organisation bogged down by a tangle of legal hurdles, poor management and frequent political interference from both legislators and the government. It is bloated, with more than 4,100 personnel and consultants spread throughout the country since its inception in 1998.
Nevertheless, coming up with a lower, more realistic valuation for its assets could be a positive move. It might spur asset sales and reduce political interference from legislators who are concerned about high prices for assets sold.
Observers, however, expressed concerns that rehashing the debt-settlement agreements between Ibra and major conglomerates and forcing debtors to hand over more assets could backfire and further damage investors' confidence in the country.
A banker said: "This government has been raising the legality of those deals for a while now. "It could be aiming for another debt-settlement negotiation, saying that the value of assets already transferred is not enough to cover debts.
"Those deals are legally binding, however, and reopening those cases could spark further negative sentiments." Mr Ferry Yosia of Vickers Ballas, a stockbroking firm in Jakarta, agreed. "Getting more assets from debtors is not a cure-all answer...Ibra has many problems, but chief among them is the slow pace of asset sales and interference from politics."