Letter: The Indover dilemma

Sat, 11/08/2008 11:46 AM  |  Reader's Forum

The reason given by Bank Indonesia (BI) that "the closing of Indover would affect the flow of overseas funds into the country does not make any sense.

BI looks naive in his statement and is fooling the public. Most bankers know well, since the crisis, that the majority of Indonesian banks have been given E ratings on average, and are categorized as high risk.

Consequently, money market dealers lack confidence and charge premium surcharges for international borrowing -- so nearly all offshore funds that come into the country go through foreign bank networks.

And yet it is so silly to regard Indover as "too big to be fail" for the domestic banking and financial system.

This bank only accounts for less than 0.05 percent of the Indonesian banking industry's assets.

The question is, how significant is the economic return Indover generates for the country?

I wonder about the government's policies, and the leadership and commitment of the President pertaining to economic development of the grass-roots population, as well as poverty and unemployment reduction -- particularly in facing the uncertainty and turmoil of the global financial crisis.

Visibly, the trillions of rupiah of tax payers' money should be allocated to development budgets for improving infrastructure, the health system and micro and small businesses.

All these programs could boost the country's prosperity and wealth distribution among its citizens, instead of retaining Indover for the benefit of a small number of the bank executives who get paid good salaries.

I also wonder: Do the politicians in parliament really understand who they work for?

I am in bold doubt that they do understand the Indover case or have sufficient knowledge of the banking and financial system. For sure, the House has signed another blind decision which is going to nowhere ... except toward big losses.

IWAN NAZIRWAN
Jakarta

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