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View all search resultsBI gets nod from House to give business units to govt
Bank Indonesia (BI) has the green light from the House of Representatives to let go its ownership of two subsidiaries by giving them away to the government after negotiations to agree on purchasing prices collapsed
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B
ank Indonesia (BI) has the green light from the House of Representatives to let go its ownership of two subsidiaries by giving them away to the government after negotiations to agree on purchasing prices collapsed.
BI initially suggested the government purchase its stakes in insurance firm PT Asuransi Kredit Indonesia (Askrindo) and financial services group PT Bahana Pembinaan Usaha Indonesia (BPUI) using estimated market values of Rp 336.6 billion (US$ 35.68 million) and Rp 1.84 trillion respectively.
BI owns a 17.6 percent share in Askrindo and 82.2 percent of BPUI. The government owns the rest.
Negotiations for the planned share divestment, albeit prolonged beyond the deadline set by the central bank law, failed to conclude as the government had *limited funds'.
Under law, BI was obliged to divest all of its shares in its subsidiaries by Jan. 15, 2009 at the latest so at to focus on its monetary and banking supervisory duties.
"To be honest, BI preferred selling to giving away because the latter would cut our assets. On the other hand, settling takeover schemes with government has apparently been too complicated and has taken too much time," BI acting governor Darmin Nasution said Wednesday during a hearing with the members of House's Commission XI on financial affairs.
Finance Minister Sri Mulyani Indrawati acknowledged there were unsettled issues explaining why the government did not want to buy BI's shares in Askrindo and BPUI.
"BPUI in particular, still has debts to the government worth Rp 1.2 trillion from then state investment account funds (RDI), causing the company to suffer negative equity," Mulyani told the hearing.
BPUI initially borrowed Rp 250 billion of RDIs in 1997 but the interest has been accumulating for 12 years, causing the total debts now to be almost five times higher.
The company and the government are now discussing the option to convert the principal debt of Rp 250 billion into government shares, Mulyani said.
"The interest and penalty costs would be rescheduled into 20 years of instalments.
"All of these schemes can be implemented only if the legislators approve that BI gives its shares to the government," she explained.
Commission XI Deputy Speaker Melchias Markus Mekeng said that legislators understood BI's difficulties in releasing its subsidiaries. "We agree in principle that BI gives the shares to the government. The mechanism will be discussed as soon as possible," he said.
State SOE Minister Mustafa Abubakar, who also attended the hearing, said that the handing over would make the government the sole owner of Askrindo and BPUI.
BI is also currently awaiting completion of a liquidation process for its subsidiary, NV Indover Bank, based in the Netherlands, declared bankrupt by an Amsterdam Court in December 2008 following historical financing problems accentuated by the global financial crisis. (bbs)
