The truth about Asian investment banking
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Why crowdfunding threatens traditional bank lending

May 1998

Waking up to reality


After months of confusion, denial and fantasy economics, reality finally dawns in Indonesia. The banking sector is being reformed and corporate debts are being rescheduled. Local borrowers are quickly finding out which foreign banks plan to stick it out in Indonesia and which can't wait to shut up shop after calling in all their loans in full. Maggie Ford reports.


When Indonesia announced that Rini Soewandi, 39, finance director of Astra International, one of the country's largest conglomerates, was to be seconded to work on the shattered banking system, it was as though a blinding light had penetrated the smog. For the first time since the financial meltdown last June a credible market name with a solid private-sector reputation was involved in fixing the country's problems.

Soewandi, a former Citibank executive, hasn't stopped since she moved into the Indonesia Bank Restructuring Agency in early April. Sweeping protesting central-bank bureaucrats aside, she has closed seven banks and placed 47 more under the IBRA's direct management. More are in her sights.

Next come the foreign banks. "The government has guaranteed deposits and creditors in the whole banking system," she says. "But at the moment foreign banks are not getting paid. Indonesian banks are giving priority to local creditors. This will be fixed....


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