Indonesia sacks bank reformer

Mr Ary Suta (left) and Mr Gerungan at the swearing-in

Indonesia has sacked a key reformer in its banking sector, a move that has been condemned by economists.

President Abdurrahman Wahid, who faces an impeachment hearing in August, has fired Edwin Gerungan, the head of the Indonesian Bank Restructuring Agency (IBRA).

His departure is a major blow to IBRA

Lin Che Wei
SG Securities

Mr Gerungan, a former vice president at Citibank, was widely respected by the international banking community as a man of integrity.

The banking agency, which he used to run, is in charge of selling off banking assets worth about $50bn that were seized during the Asian economic crisis of 1997-98.

The government hopes the sales will help it to recoup money spent on bailing out the banking sector.

Too slow?

The official reason for Mr Gerungan's departure was because he has been slow to kick off the asset sales.

Mr Ramli: 'We just need people who are more action-oriented'

"Edwin is a nice guy, a man of integrity, an honest man," said Rizal Ramli, the finance minister.

"We just need people who are more action-oriented to do this work."

However, according to some reports, Mr Gerungan was ousted after he opposed a controversial debt restructuring deal.

I Putu Gde Ary Suta has since been sworn in to replace Mr Gerungan and is IBRA's fourth head in only one-and-half years.

Mr Ary Suta promises to act quickly

Speaking at his swearing-in ceremony, Mr Ary Suta said, "We'll do our best to speed up restructuring."

Mr Ary Suta was chief of the capital markets regulator Bapepam until 1998 and a senior official at the finance ministry before taking up his new post.

Selling shrimp

IBRA, which has been charged with selling off assets, ranging from shrimp farms to luxury Bali hotels, has not been a huge success.

The parliament has interceded several times to prevent the agency from selling assets to foreign investors, and the move to sack Mr Gerungan is seen as further political meddling.

Mr Gerungan, himself, has said that he did not quit of his own accord.

"I really respected Edwin Gerungan because he managed to steer away from the controversy and scandal which has plagued the IBRA under previous chairmen," said Lin Che Wei, head of research at SG Securities in Jakarta.

"His departure is a major blow to IBRA," he added.

Economic crisis

Indonesia's economy has floundered from one crisis to another in the last few years.

The country is struggling to re-build a collapsed banking sector, while paying interest on billions of debt that almost exceeds its annual gross domestic product.

President Wahid faces impeachment

It is also in the process of repairing its relations with international creditors and the International Monetary Fund by overhauling its 2001 budget.

The government recently raised the cost of fuel by 30% as part of an attempt to reduce state subsidies.

Under an IMF programme, Indonesia must phase out all subsidies by 2003.

The IMF is withholding a $400m loan until Indonesia makes adequate progress on restructuring its economy.

President Wahid faces his impeachment trial in August after attracting widespread criticism from the parliament during his 20 months in power.