INDONESIA: Indonesians against parlimentary vote to hold criminal investigation into a bank bailout

Record ID: 560103

  • Title: INDONESIA: Indonesians against parlimentary vote to hold criminal investigation into a bank bailout
  • Date: 5th March 2010
  • Summary: JAKARTA, INDONESIA (MARCH 4, 2010) (REUTERS) PLENARY SESSION CHAIRMAN OF HOUSE OF REPRESENTATIVES, MARZUKI ALI, OPENS SESSION VOTING BOARD PARLIAMENTARIANS STANDING DURING OPEN VOTING JOURNALISTS AT BALCONY FEMALE MP CONDUCTING PEOPLE SINGING MP SINGING AS RESULT COMES MP SINGING PLENARY WITH VOTING BOARD VOTING BOARD SHOWING '325 TO 212' PARLIAMENTARIANS DURING PLENARY SESSION ANALYST PURBAYA YUDHO SADEWA (SOUNDBITE) (English) DANAREKSA RESEARCH INSTITUTE ANALYST, PURBAYA YUDHO SADEWA, SAYING "There will be a short term negative impact on capital markets because it creates negative sentiment. Because many investors will think that there will be uncertainty in political in Indonesia. But in the longer term, I don't think the impact will be that deep. Because right now the fundamental of Indonesia economic, the Indonesian economy, is very good." ANALYSTS IN DANAREKSA INSTITUTE (SOUNDBITE) (English) DANAREKSA RESEARCH INSTITUTE ANALYST, PURBAYA YUDHO SADEWA SAYING: "The bailout itself is correct. I believe without bailout our economy right now will be in deep recession or bigger crisis than even 1997. But I believed the decision is taken based on political needs, basically. Because the price is very tempted, they are aiming for the Vice President position. So basically last night was Democrat party against all party in the parliament." MAN READING NEWSPAPER AT BUS STOP (SOUNDBITE) (Bahasa Indonesia) JAKARTA RESIDENT, TEDI JUNAEDI, SAYING: "Vice President Boediono and Sri Mulyani have been accused of committing a crime but there is no evidence." JUNAEDI READING NEWSPAPER MAN TALKING 20 (SOUNDBITE) (Bahasa Indonesia) JAKARTA RESIDENT, MAX, SAYING "I wonder why some Parliament members changed their minds so quickly. In the morning they voted against, and in the afternoon they voted for criminal investigation. I suspect there were political reasons behind it." VARIOUS OF JAKARTA STREETS
  • Embargoed: 20th March 2010 12:00
  • Keywords:
  • Location: Indonesia
  • Country: Indonesia
  • Topics: Crime / Law Enforcement,Domestic Politics
  • Reuters ID: LVA2CEM9Q13D133E7HA8OLQJXJMY
  • Story Text: Indonesia president Susilo Bambang Yudhoyono is expected to make an address on Thursday (March 4) to discuss a parliamentary vote in favour of a criminal investigation into a 2008 bank bailout.
    In an overnight voting session on Wednesday (March 3), the parliament voted 325 to 212 in favour of a criminal investigation of Finance Minister Sri Mulyani Indrawati and Vice President Boediono over their decision to bailout Bank Century in 2008.
    The issue has been a top political concern for the country as it threatens to divide the ruling democratic party and could have short term effects on economic markets.
    Still, analysts say neither the finance minister or the vice president is expected to lose their jobs because the parliamentary inquiry failed to produce evidence that they were involved in any criminal activity or corruption.
    The original inquiry offered two conflicting recommendations.
    One found the bank rescue was justified. The other called for Indrawati and Boediono to face criminal investigation for authorising the bailout in late 2008, at the height of the financial crisis.
    Members from opposition parties were singing and dancing after the result.
    An analyst from Danareksa Research Institute, Purbaya Yudhi Sadewa, said economic markets might be affected in the short term.
    "There will be a short term negative impact on capital market because it creates negative sentiment. Because many investors will think that there will be uncertainty in political in Indonesia. But in the longer term, I don't think the impact will be that deep. Because right now the fundamental of Indonesia economic is very good," said Sadewa.
    He suspected politics may be playing a role for some members of parliament.
    "The bailout itself is correct. I believe without bailout our economy right now will be in deep recession or bigger crisis even 1997. But I believed the (Parliament) decision is taken based on political needs, basically. Because the price is very tempted, they are aiming for the Vice President position. So basically last night was Democrat party against all party in the parliament," said Sadewa.
    Jakarta residents on Thursday (March 4) said they think the two technocrats are clean.
    "Vice President and Sri Mulyani have been accused of committing a crime but there is no evidence," said Tedi Junaedi.
    Others said they suspect lobbying measures were at play.
    "I wonder why some Parliament members changed their minds so quickly. In the morning they voted against and in the afternoon they voted for criminal investigation. I suspected there were political reasons behind it," Max, a Jakarta resident, said.
    Boediono is a well respected technocrat who has held a number of high-profile jobs in the cabinet and central bank during Indonesia's crisis years and subsequent recovery.
    Finance Minister Indrawati has pleased many foreign investors by cleaning up corruption, but has also made enemies in the old business elite, particularly with a drive to boost tax collection.
    So far, Indonesian stocks, bonds and the rupiah have shown little reaction to the political infighting.
    But prolonged conflict over reforms could put that at risk and reverse some of the hefty gains of the past year.
    Indonesia was one of the star emerging markets last year with stocks up 90 percent, government bonds up 20 percent and the rupiah, Asia's best-performing currency, up 17 percent.
    Many analysts say an upgrade of Indonesia's sovereign debt to investment grade is within reach in a couple of years. It has been widely tipped as the country most likely to join the "BRICs" -- Brazil, Russia, India and China -- in the select group of essential emerging markets investors cannot afford to ignore.
    Wednesday's debate underlined tensions between Yudhoyono's pro-market, pro-reform Democrat Party and his two main coalition partners -- the Golkar Party and Prosperous Justice Party (PKS), which both support a criminal investigation.
    The Democrat Party controls about a quarter of the 560 seats in parliament and together with coalition partners about 75 percent. But the defection of key coalition members on this issue swung the balance in favour of the opposition.
    ENDS.
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