| BUSINESSWEEK ONLINE : NOVEMBER 13, 2000 ISSUE | ||||||||
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| INTERNATIONAL -- ASIAN BUSINESS
Another Casualty of Jakarta's Crony Capitalism (int'l edition) The sacking of a reformer could have dire consequences By most accounts, Cacuk Sudarijanto was doing a good job. As head of the government agency charged with cleaning up Indonesia's mass of corporate debt, he had raised $1.2 billion by auctioning off seized assets to foreign investors in a bidding process that earned compliments for its transparency. He had just set in motion the beginnings of a debt restructuring deal for nationalized banks. All in all, Sudarijanto's administration of the Indonesian Bank Restructuring Agency (IBRA) stood in sharp contrast to the persistent stream of bad economic news out of Jakarta. Then came a rude shock: On Oct. 30, Sudarijanto was fired after losing a political turf battle with a close ally of President Abdurrahman Wahid. Sudarijanto's ouster comes as the latest blow to Indonesia's economic revival. To balance the budget this year, the government was counting on sales of an additional $800 million in IBRA-controlled assets. With the agency in turmoil, any more clearing of assets this year is far from assured. That could add to a budget shortfall approaching $6 billion. The International Monetary Fund has already bailed out Indonesia's economy to the tune of $43 billion since it plunged into crisis in 1997, and it is getting impatient with the slow pace of restructuring. The IMF, financial analysts, and investors want Indonesia to take strong measures to raise its revenues and restructure its bad debt. ''Having another round of musical chairs at the top does not augur well for speeding up the process of economic recovery,'' says a Jakarta broker. PRIVATIZING PALL. Much now depends on who replaces Sudarijanto. The IBRA chief was able to make progress in asset sales because of the respect he garnered from even politically influential debtors. He had earned a reputation for ruling against the powerful--in one instance back in 1992, he lost his job as an executive of state-owned long-distance phone company Indosat when he denied a contract to a business partner of Bambang Trihatmodjo, son of then-President Suharto. Reformers are worried that the pace of asset disposal and privatization will now slow--and that the government will go easy on politically powerful debtors. ''It will depend more on the conglomerates and their relationships with the President,'' says Takahira Ogawa, director of Asia-Pacific sovereign ratings at Standard & Poor's Ratings Services in Singapore. Already, special interests are maneuvering. One of the five candidates to succeed Sudarijanto is Widigdo Sukarman, who was removed earlier this year as president of state-owned Bank Negara Indonesia 1946 when questions were raised concerning the bank's failure to collect a $1.2 billion loan from Suharto-linked textile manufacturer Texmaco Group. Sukarman could not be reached for comment, but BNI '46 has previously denied wrongdoing. Signs that Sudarijanto was in trouble had been appearing for months. A Cabinet reshuffle in August left all key ministerial posts, including the economic ones, in the hands of little-known personal friends of Wahid's. The privatization of three nationalized banks was put on the back burner because of a falling stock market and currency. A lawsuit against Suharto that the attorney general had hoped would ultimately lead to the retrieval of billions of dollars siphoned from state coffers was dismissed on grounds that the 79-year-old former leader was too ill to stand trial. A push to recover the ex-President's assets would have given IBRA a stronger mandate to collect from its own deadbeat debtors. Then, Wahid intervened in legal proceedings by Sudarijanto against the controlling shareholders of three conglomerates. Sudarijanto's undoing finally came when he challenged Finance Minister Prijadi Praptosuhardjo for the right to control the country's planned privatization of state-owned enterprises. Finance industry sources say the fight began shortly after Praptosuhardjo became Finance Minister in August. Sudarijanto argued that because he had succeeded in raising 60% of his $2 billion asset-disposal target for the year, he should be allowed to manage the privatization of national telephone company Telkom, the electrical utility PLN, and other state-owned enterprises. ''Cacuk's view was: 'This is a singular process. It should all come under me,''' says a banker in Jakarta. ''He lost a political fight that he shouldn't have gotten into.'' Sudarijanto and Praptosuhardjo did not respond to requests for interviews. Observers lament that even though Sudarijanto blundered by taking on an unbeatable foe, his firing looks entirely too much like the crony capitalism of the past. ''There are too many vested interests,'' says Sofjan Wanandi, chairman of the government-appointed National Business Council. And Indonesia's economy will continue to suffer the consequences. By Michael Shari in Jakarta _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ _ BACK TO TOP |
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