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Sri Mulyani speaks out, to the relief of public


10 December 2009

 

Jakarta Official Defends Bailout
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By TOM WRIGHT
JAKARTA -- Indonesian Finance Minister Sri Mulyani Indrawati said a parliamentary probe into the government's handling of a 0 million bank bailout last year is an attempt by rival politicians to unseat her because of her efforts to overhaul the country's bureaucracy.
View Full Image
Bloomberg News
Indonesia's Finance Minister Sri Mulyani Indrawati, shown speaking at a seminar in Jakarta last week, in an interview defended the bailout of Bank Century last year.
Ms. Sri Mulyani and Vice President Boediono have become subjects in recent weeks of a parliamentary investigation into the bailout in November 2008 of Bank Century, a small Indonesian lender. As finance minister, Ms. Sri Mulyani oversaw the bailout; Mr. Boediono was central-bank governor at the time.
Ms. Sri Mulyani said in an interview that failing to guarantee Bank Century's deposits at a time of huge capital outflows from emerging markets could have sparked panic among depositors of other banks. "I felt like what I did was the right thing for the country," she said.
Mr. Boediono has also defended the bailout as necessary to stop wider panic in the banking sector.
The head of the investigation, Idrus Marham, who is secretary-general of the Golkar Party, said on Wednesday the investigation was backed by all major political parties and wasn't targeted at Ms. Sri Mulyani.
"We didn't do this to target Sri Mulyani. The focus is to get data and facts" on the bailout, Mr. Marham said.
Fighting Corruption in Indonesia
View Slideshow
Baso Ballang/Associated Press
Scores of students, including this one, armed with rocks and wooden planks clashed with anti-riot police and vandalized commercial buildings at a rally in Makassar, the South Sulawesi provincial capital, 1,000 miles northeast of Jakarta.
More photos and interactive graphics
He declined to comment on the specifics of the investigation, which began this month and he said will take two months to complete.
Mr. Marham and other Golkar Party lawmakers who are leading the probe claim the bailout of Bank Century was done without legal authority and without proving a capital injection was needed to stave off a run on other banks. Some politicians have said the bank wasn't eligible for a rescue because its problems stemmed from fraud that led to the bank's near-collapse. One of the bank's former owners, Robert Tantular, was sentenced in September to four years in prison for fraud.
Ms. Sri Mulyani said the bailout was legal.
A former university economics professor and International Monetary Fund senior executive, Ms. Sri Mulyani is respected by many foreign investors for her role in managing Indonesia's economy, which has included efforts to weed out endemic corruption.
She said she believed the probe was an attempt to discredit her by politicians that oppose her reform agenda, notably leaders of the Golkar Party, including Chairman Aburizal Bakrie, a billionaire businessman and former cabinet member in President Susilo Bambang Yudhoyono's first-term administration.
Ms. Sri Mulyani said tensions between her and Mr. Bakrie date to last year when she opposed the closure of Indonesia's stock exchange amid a run on companies controlled by Mr. Bakrie. Mr. Bakrie, one of whose coal-mining firms accounted for a third of daily turnover on the bourse at the time, ordered the closure, she said.
Mr. Bakrie, through a spokesman, declined to comment on the closure.
The finance ministry also last year imposed a travel ban on a number of coal-mining executives, including some from Mr. Bakrie's companies, after a dispute over the refusal of the companies to pay royalties on the sale of coal to the government.
"Abuizal Bakrie is not happy with me," she said. "I'm not expecting anyone in Golkar will be fair or kind to me" during the probe.
Mr. Bakrie denied there was any problem between himself and Ms. Sri Mulyani.
Many analysts say the claim that the bailout was illegal appears to be without merit.
"Under the circumstances, what Sri Mulyani and Boediono did was to prevent a crisis," said Umar Juoro, chairman of the Center for Information and Development Studies, a Jakarta-based think tank.
Other government officials involved in the bailout have supported Ms. Sri Mulyani. The head of Indonesia's Deposit Guarantee Agency told an Indonesian magazine, Gatra, last week that the rescue was lawful.
Some senior Golkar politicians have in recent weeks publicly called for Ms. Sri Mulyani and Mr. Boediono to hand their jobs to deputies while the investigation is under way.
President Yudhoyono won re-election to a second term this year on a graft-busting platform. Indonesia's natural-resources-powered economy is forecast by private economists to grow by more than 4% this year, a healthy clip compared with many developed economies, but economists question whether that growth will be sustained if the country can't get a handle on corruption -- a major deterrent to foreign investment here, which lags behind India and China.
Popular dissatisfaction with corruption continues to mount. On Wednesday, students armed with rocks and wooden planks clashed with riot police as more than two dozen rallies involving thousands of protesters broke out as part of annual events designed to mark International Anticorruption Day.
Any signs of an intensification of efforts to oust Ms. Sri Mulyani would also likely spook foreign investors who have applauded her antigraft drive and management of the budget. Since taking up her job at the finance ministry in 2005, she has overseen a reduction in public debt to 30% of GDP from 60%, making it easier for Indonesia to sell debt to foreign institutional investors, bankers say.
"There's no way you could fill the credibility gap that would be created by her departure," says David Fernandez, a managing director of J.P. Morgan in Singapore who heads the bank's emerging-Asia research.
Indonesia is serious about pushing through overhauls to clear up what Mr. Yudhoyono has referred to as a "judicial mafia" of corrupt officials in the courts, attorney general's office and police, Ms. Sri Mulyani said. But she acknowledged that Mr. Yudhoyono's first term was a "honeymoon" for her.
"I should become more realistic. I'm expecting a nasty battle if I'm going to do the reform," she said.
Priorities, Ms. Sri Mulyani said, include continuing to clean up her own ministry, where there is still corruption, and catching more tax cheats. Past efforts led by Ms. Sri Mulyani have included a war on graft in the tax office, greatly increasing the nation's tax base, and customs department.
Write to Tom Wright at tom.wright@wsj.com

 

The Wall Street Jounal published a bombshell piece titled "Indonesian Minister defends bailout". It was a frank and direct statement by the internationally acclaimed Finance Minister which shocked some parties but relieved the general public who had long wanted to see some light at the end of the political tunnel which the Bank Century case had become. The finger points to Aburizal Bakrie eh is facing huge tax obligations and fines in a case being prepared by the Indonesian Tax Office. Presdent Yudhoyono is expected to support the Finance Minister who is the most important asset in Indonesia's economic credibility.

Indonesia's Finance Minister Sri Mulyani Indrawati, shown speaking at a seminar in Jakarta last week,in an interview defended the bailout of Bank Century last year.- The Wall Street Journal

Jakarta Official Defends Bailout
Article
Slideshow
Comments (3)
MORE IN WORLD »
EmailPrinter 
FriendlyShare:
facebook
↓ More
Save This
↓ More
Text 
By TOM WRIGHT
JAKARTA -- Indonesian Finance Minister Sri Mulyani Indrawati said a parliamentary probe into the government's handling of a 0 million bank bailout last year is an attempt by rival politicians to unseat her because of her efforts to overhaul the country's bureaucracy.
View Full Image
Bloomberg News
Indonesia's Finance Minister Sri Mulyani Indrawati, shown speaking at a seminar in Jakarta last week, in an interview defended the bailout of Bank Century last year.
Ms. Sri Mulyani and Vice President Boediono have become subjects in recent weeks of a parliamentary investigation into the bailout in November 2008 of Bank Century, a small Indonesian lender. As finance minister, Ms. Sri Mulyani oversaw the bailout; Mr. Boediono was central-bank governor at the time.
Ms. Sri Mulyani said in an interview that failing to guarantee Bank Century's deposits at a time of huge capital outflows from emerging markets could have sparked panic among depositors of other banks. "I felt like what I did was the right thing for the country," she said.
Mr. Boediono has also defended the bailout as necessary to stop wider panic in the banking sector.
The head of the investigation, Idrus Marham, who is secretary-general of the Golkar Party, said on Wednesday the investigation was backed by all major political parties and wasn't targeted at Ms. Sri Mulyani.
"We didn't do this to target Sri Mulyani. The focus is to get data and facts" on the bailout, Mr. Marham said.
Fighting Corruption in Indonesia
View Slideshow
Baso Ballang/Associated Press
Scores of students, including this one, armed with rocks and wooden planks clashed with anti-riot police and vandalized commercial buildings at a rally in Makassar, the South Sulawesi provincial capital, 1,000 miles northeast of Jakarta.
More photos and interactive graphics
He declined to comment on the specifics of the investigation, which began this month and he said will take two months to complete.
Mr. Marham and other Golkar Party lawmakers who are leading the probe claim the bailout of Bank Century was done without legal authority and without proving a capital injection was needed to stave off a run on other banks. Some politicians have said the bank wasn't eligible for a rescue because its problems stemmed from fraud that led to the bank's near-collapse. One of the bank's former owners, Robert Tantular, was sentenced in September to four years in prison for fraud.
Ms. Sri Mulyani said the bailout was legal.
A former university economics professor and International Monetary Fund senior executive, Ms. Sri Mulyani is respected by many foreign investors for her role in managing Indonesia's economy, which has included efforts to weed out endemic corruption.
She said she believed the probe was an attempt to discredit her by politicians that oppose her reform agenda, notably leaders of the Golkar Party, including Chairman Aburizal Bakrie, a billionaire businessman and former cabinet member in President Susilo Bambang Yudhoyono's first-term administration.
Ms. Sri Mulyani said tensions between her and Mr. Bakrie date to last year when she opposed the closure of Indonesia's stock exchange amid a run on companies controlled by Mr. Bakrie. Mr. Bakrie, one of whose coal-mining firms accounted for a third of daily turnover on the bourse at the time, ordered the closure, she said.
Mr. Bakrie, through a spokesman, declined to comment on the closure.
The finance ministry also last year imposed a travel ban on a number of coal-mining executives, including some from Mr. Bakrie's companies, after a dispute over the refusal of the companies to pay royalties on the sale of coal to the government.
"Abuizal Bakrie is not happy with me," she said. "I'm not expecting anyone in Golkar will be fair or kind to me" during the probe.
Mr. Bakrie denied there was any problem between himself and Ms. Sri Mulyani.
Many analysts say the claim that the bailout was illegal appears to be without merit.
"Under the circumstances, what Sri Mulyani and Boediono did was to prevent a crisis," said Umar Juoro, chairman of the Center for Information and Development Studies, a Jakarta-based think tank.
Other government officials involved in the bailout have supported Ms. Sri Mulyani. The head of Indonesia's Deposit Guarantee Agency told an Indonesian magazine, Gatra, last week that the rescue was lawful.
Some senior Golkar politicians have in recent weeks publicly called for Ms. Sri Mulyani and Mr. Boediono to hand their jobs to deputies while the investigation is under way.
President Yudhoyono won re-election to a second term this year on a graft-busting platform. Indonesia's natural-resources-powered economy is forecast by private economists to grow by more than 4% this year, a healthy clip compared with many developed economies, but economists question whether that growth will be sustained if the country can't get a handle on corruption -- a major deterrent to foreign investment here, which lags behind India and China.
Popular dissatisfaction with corruption continues to mount. On Wednesday, students armed with rocks and wooden planks clashed with riot police as more than two dozen rallies involving thousands of protesters broke out as part of annual events designed to mark International Anticorruption Day.
Any signs of an intensification of efforts to oust Ms. Sri Mulyani would also likely spook foreign investors who have applauded her antigraft drive and management of the budget. Since taking up her job at the finance ministry in 2005, she has overseen a reduction in public debt to 30% of GDP from 60%, making it easier for Indonesia to sell debt to foreign institutional investors, bankers say.
"There's no way you could fill the credibility gap that would be created by her departure," says David Fernandez, a managing director of J.P. Morgan in Singapore who heads the bank's emerging-Asia research.
Indonesia is serious about pushing through overhauls to clear up what Mr. Yudhoyono has referred to as a "judicial mafia" of corrupt officials in the courts, attorney general's office and police, Ms. Sri Mulyani said. But she acknowledged that Mr. Yudhoyono's first term was a "honeymoon" for her.
"I should become more realistic. I'm expecting a nasty battle if I'm going to do the reform," she said.
Priorities, Ms. Sri Mulyani said, include continuing to clean up her own ministry, where there is still corruption, and catching more tax cheats. Past efforts led by Ms. Sri Mulyani have included a war on graft in the tax office, greatly increasing the nation's tax base, and customs department.
Write to Tom Wright at tom.wright@wsj.com

 

 

Indonesian Minister defends bailout

By TOM WRIGHT


JAKARTA -- Indonesian Finance Minister Sri Mulyani Indrawati said a parliamentary probe into the government's handling of a 0 million bank bailout last year is an attempt by rival politicians to unseat her because of her efforts to overhaul the country's bureaucracy.

Ms. Sri Mulyani and Vice President Boediono have become subjects in recent weeks of a parliamentary investigation into the bailout in November 2008 of Bank Century, a small Indonesian lender. As finance minister, Ms. Sri Mulyani oversaw the bailout; Mr. Boediono was central-bank governor at the time.

Ms. Sri Mulyani said in an interview that failing to guarantee Bank Century's deposits at a time of huge capital outflows from emerging markets could have sparked panic among depositors of other banks. "I felt like what I did was the right thing for the country," she said.

Mr. Boediono has also defended the bailout as necessary to stop wider panic in the banking sector.

The head of the investigation, Idrus Marham, who is secretary-general of the Golkar Party, said on Wednesday the investigation was backed by all major political parties and wasn't targeted at Ms. Sri Mulyani.

"We didn't do this to target Sri Mulyani. The focus is to get data and facts" on the bailout, Mr. Marham said.

He declined to comment on the specifics of the investigation, which began this month and he said will take two months to complete.

Mr. Marham and other Golkar Party lawmakers who are leading the probe claim the bailout of Bank Century was done without legal authority and without proving a capital injection was needed to stave off a run on other banks. Some politicians have said the bank wasn't eligible for a rescue because its problems stemmed from fraud that led to the bank's near-collapse. One of the bank's former owners, Robert Tantular, was sentenced in September to four years in prison for fraud.

Ms. Sri Mulyani said the bailout was legal.

A former university economics professor and International Monetary Fund senior executive, Ms. Sri Mulyani is respected by many foreign investors for her role in managing Indonesia's economy, which has included efforts to weed out endemic corruption.

She said she believed the probe was an attempt to discredit her by politicians that oppose her reform agenda, notably leaders of the Golkar Party, including Chairman Aburizal Bakrie, a billionaire businessman and former cabinet member in President Susilo Bambang Yudhoyono's first-term administration.

Ms. Sri Mulyani said tensions between her and Mr. Bakrie date to last year when she opposed the closure of Indonesia's stock exchange amid a run on companies controlled by Mr. Bakrie. Mr. Bakrie, one of whose coal-mining firms accounted for a third of daily turnover on the bourse at the time, ordered the closure, she said.

Mr. Bakrie, through a spokesman, declined to comment on the closure.

The finance ministry also last year imposed a travel ban on a number of coal-mining executives, including some from Mr. Bakrie's companies, after a dispute over the refusal of the companies to pay royalties on the sale of coal to the government.

"Abuizal Bakrie is not happy with me," she said. "I'm not expecting anyone in Golkar will be fair or kind to me" during the probe.

Mr. Bakrie denied there was any problem between himself and Ms. Sri Mulyani.

Many analysts say the claim that the bailout was illegal appears to be without merit.

"Under the circumstances, what Sri Mulyani and Boediono did was to prevent a crisis," said Umar Juoro, chairman of the Center for Information and Development Studies, a Jakarta-based think tank.

Other government officials involved in the bailout have supported Ms. Sri Mulyani. The head of Indonesia's Deposit Guarantee Agency told an Indonesian magazine, Gatra, last week that the rescue was lawful.

Some senior Golkar politicians have in recent weeks publicly called for Ms. Sri Mulyani and Mr. Boediono to hand their jobs to deputies while the investigation is under way.

President Yudhoyono won re-election to a second term this year on a graft-busting platform. Indonesia's natural-resources-powered economy is forecast by private economists to grow by more than 4% this year, a healthy clip compared with many developed economies, but economists question whether that growth will be sustained if the country can't get a handle on corruption -- a major deterrent to foreign investment here, which lags behind India and China.

Popular dissatisfaction with corruption continues to mount. On Wednesday, students armed with rocks and wooden planks clashed with riot police as more than two dozen rallies involving thousands of protesters broke out as part of annual events designed to mark International Anticorruption Day.

Any signs of an intensification of efforts to oust Ms. Sri Mulyani would also likely spook foreign investors who have applauded her antigraft drive and management of the budget. Since taking up her job at the finance ministry in 2005, she has overseen a reduction in public debt to 30% of GDP from 60%, making it easier for Indonesia to sell debt to foreign institutional investors, bankers say.

"There's no way you could fill the credibility gap that would be created by her departure," says David Fernandez, a managing director of J.P. Morgan in Singapore who heads the bank's emerging-Asia research.

Indonesia is serious about pushing through overhauls to clear up what Mr. Yudhoyono has referred to as a "judicial mafia" of corrupt officials in the courts, attorney general's office and police, Ms. Sri Mulyani said. But she acknowledged that Mr. Yudhoyono's first term was a "honeymoon" for her.

"I should become more realistic. I'm expecting a nasty battle if I'm going to do the reform," she said.

Priorities, Ms. Sri Mulyani said, include continuing to clean up her own ministry, where there is still corruption, and catching more tax cheats. Past efforts led by Ms. Sri Mulyani have included a war on graft in the tax office, greatly increasing the nation's tax base, and customs department.

Write to Tom Wright at tom.wright@wsj.com

 

 

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12 Comments:

  1. From sen on 11 December 2009 12:44:56 WIB
    great !

    let the public decide. Bakrie who can't handle the Lapindo case humanely or Sri Mulyani the reformist.



  2. From jaka on 11 December 2009 22:13:17 WIB
    Prens sadayana , keliatannya mah Drakulla ekonomi berdasi kupu-kupu bak bangsawan holland spraken itu, memang punya Men, Money,Machine ,Management dan MOTIVES untuk menjatuhkan Sri Mulyani dengan isu Bank century almarhum itu..

    Sayah tidak tau,apakah pak presiden menganggap sang drakulla ekonomi itu sebagai musuh atau kawan...he he he...namanya juga politik yaa..kita mah nonton dan komentar wae lah...sambil sekali-sekali bantuin bu Sri dan pak Boed..sanes kitu,prens sadayana ?
  3. From Arthur Reinhart on 11 December 2009 22:29:23 WIB
    Just wait and see.....once the case is over (and once it's been proven that Mrs. Mulyani and Mr. Boediono did the right thing!), all this will furthermore worsen the image of Golkar and those opposing parties who tried to unseat them.

    We all know of Aburizal Bakrie and how "great" his reputation is - no need for introduction! Same thing with Hadi Purnomo when he was the chairman of national tax.
  4. From Felix on 12 December 2009 00:32:32 WIB
    Sepertinya mbak Ani di bantu oleh jajaran Depkeu sudah siap bertempur all out.. katanya hari ini dia akan menuntut Bambang Soesatyo yg mengatakan bahwa dia memiliki rekaman percakapan antara mbak Ani dgn Robert Tantular dalam rapat KSSK. Potongan rekaman tersebut di yakini depeku sebagai palsu.. dan saya juga berpikir bahwa rekaman itu palsu apalagi di katakan bahwa rekaman itu ada di bagian akhir rekaman yg durasi nya 4 jam.. jadi setelah rapat KSSK berakhir.. masa kata2 nya "Sudahlah Robert, sekarang kita sedang rapat tertutup untuk menentukan bail-out," bukan kah di akhir rapat sudah di putuskan bahwa century harus di bail out.. Kalau rekaman si Bambang itu palsu.. saya rasa layak sekali dia masuk penjara..
  5. From hok on 12 December 2009 03:11:37 WIB
    Pelahan namun pasti ,benang kusut itu sudah mulai diluruskan helai demi helai oleh Sri Mulyani.

    Dalam perspektif saya, A Bakrie akan menghadapi persoalan sangat besar setelah usaha2 politic bargaining yg sedang dilakukan saat2 ini di pansus DPR.

    Kecuali Sri Mulyani menempuh jalan damai,dengan cara memberikan pengampunan pajak sebesar Rp. 2,1 Trilyun yg merupakan biaya dan penghasilan perusahaan yg tidak dilaporkan oleh kelompok usaha Bakrie Group kepada kantor perpajakan Indonesia dan tidak menyeret pemilik kelompok usaha keluarga itu ke penjara.

    Saya berpikir, seandainya pengemplangan pajak ini terjadi di Amerika Serikat,dapat dipastikan pemilik usaha ini akan tinggal di hotel prodeo dan tentu tidak akan terjadi keributan politik yg dibuat2 seperti sekarang ini.

    Mampukah Sri Mulyani membuat sejarah baru itu? waktu yg akan menjawabnya,bukan?



  6. From Sunu Gunarto on 12 December 2009 09:53:03 WIB
    Permainan politik tingkat tinggikah ini? Kalau pada pemerintahan masa lalu ada pihak yang "dirugikan" karena masalah "bailout" perusahaannya tidak disanggupi oleh MENKEU waktu itu maka kasus bank century yang sudah "selesai" dijadikan sarana menyerang balik MENKEU saat ini. Ya, semoga cepat selesai dan kemenangan ada dipihak yang benar. Amin.

    (http://formulabisnis.com/?id=Sunu_g)
  7. From rangga aditya on 13 December 2009 11:05:50 WIB
    hehehe ... it\'s like watching xena vs hydra (LOL)
  8. From John Waworuntu on 13 December 2009 22:30:25 WIB
    Integrity is the key word here. Sri Mulyani is one of the very few clean government officials that I am aware of. She is instrumental in the resuscitation of Indonesian labour intensive industries. Before SBY era, illegal imports are dominating indonesian consumer market and was the main cause of many factories close-down and massive lay-off
    Just imagine, the so called door-to-door service by many customs clarance agencies only charge 25 million rupiah all-in (nothing else)and you will get your imported goods in one 20 feet container delivered to your warehouse, in average you can load about 500 million rupiahs worth of goods into the container. Sri Mulyani eradicated such practice and by doing so stepped on a few toes. As an owner of a SME, this is the only time I can feel the helping hand of our government. Bravo Ibu. God bless you.
  9. From Andy on 14 December 2009 20:33:18 WIB
    Pak Wimar,

    Saya mulai hilang harapan. Dua saluran berita terbesar di Indonesia tidak menyiarkan berita berimbang. Usaha mencari dukungan di facebook cuma berhenti pada puluhan ribu orang. Para penulis di koran-koran (kecuali Anda dan segelintir yang lain) sepertinya takut berpihak kepada SMI dan Boediono. Orang-orang yang membela SMI dan Boediono kebanyakan adalah bankir dan ekonom, karena hanya mereka yang paham apa yang terjadi. Tapi sayangnya mereka tidak punya waktu untuk cuap-cuap tiap malam di depan televisi seperti para anggota dewan dan pengamat itu.

    Apa lagi yang bisa kami lakukan? Membela SMI dan Boediono buat saya tidak kalah penting daripada membela Bibit-Chandra maupun Prita. Tapi sayangnya belum ada cetusan kisah yang bisa memancing emosi publik seperti ditahannya Bibit-Chandra ataupun ditahannya Prita. Apakah kita mesti menunggu sampai SMI masuk penjara sebelum akhirnya kita bisa turun ke jalan?

    Pak Wimar, apa yang bisa kami lakukan?
  10. From Chandra on 15 December 2009 22:33:57 WIB
    SMI and Boedi carry integrity, expertise and professionalism that almost nobody in DPR have.
    But the other sad side of this BC row is SBY - who supposed to defend his minister and his VP - stand in the spectators bench watching how the balance changes. I didn't say that he's ready to dump both, but I can't help thinking that way.
  11. From Che Ahmad on 06 May 2010 17:33:59 WIB
    Alas the power play behind the scene at their very best.Period.
  12. From Zarya on 19 June 2011 21:48:51 WIB
    Fell out of bed feeling down. This has bgrithened my day!

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