Will Indonesia's Bank Crisis Affect Us???
************************************************
Bank Run in Jakarta--Cash machines attacked
DEPOSITORS rushed to withdraw their money from Indonesia's largest
private bank yesterday as rumours spread that it was running out of money.
The run on the bank came amid deep anxiety about an economic meltdown despite the fall of President Suharto.
Branches of the Bank of Central Asia, owned by Liem Sioe Liong, one of Mr Suharto's closest business partners, and two of the former ruler's children, were besieged by customers. At one point the queue stretched for half a mile and customers waited up to two hours to withdraw cash.
The run came after several days of heavy withdrawals following the riots that devastated much of the capital's commercial centre. As a symbol of the Suhartos' wealth, the bank was a target of the rioters, with 122 branches and 1,250 cash machines destroyed by mobs.
Yesterday, at a branch in the business district, guards let in customers 20 or 30 at a time to avoid a crush at windows where clerks counted out stacks of cash. A spokesman declined to comment on the bank's financial position, saying only that all deposits and
loans were "guaranteed by the government".
Press reports that Mr Liong's son, Anthony, who holds a 23.15 per cent share in the bank, had committed stlg60.6 million to replenish its funds, failed to calm depositors' confidence in Jakarta or other major cities, where there were similar scenes.
Almost every bank chain in the city has been closing its offices at lunchtime since re-opening on Friday to limit withdrawals and allow staff to process the frantic morning's business.
As the euphoria over Mr Suharto's resignation six days ago subsides, Indonesians are painfully aware that the economic problems that his regime bequeathed could become even worse unless Bacharuddin Jusuf Habibie, his successor, tackles them soon. The country has foreign debts of stlg82 billion, the rupiah has lost all its credibility, interest rates are over 60 per cent, prices have doubled and unemployment has soared.
A team of International Monetary Fund officials arrived in Jakarta
yesterday to assess the new government's commitment to economic reform and whether the next installment of its suspendedstlg24 billion aid package should be paid.
Mr Habibie, who served as vice-president under Mr Suharto and is tainted by his close association with him, has yet to convince doubters of his willingness to overhaul a system plagued by corruption, despite his promise to hold elections "as soon as
possible".
The new president met some of his leading critics at the presidential palace in the morning in another effort to prove his reformist credentials, and then toured Chinatown, one of the areas most badly ravaged by the violence two weeks ago.
The London Telegraph, May 27, 1998
Jim
|
