Yesterday's announcement by the State Administrative Court of Jakarta that the government's takeover of Bank Bali was illegal is a huge blow to Indonesia's recuperation. The court's action questions the legitimacy of the Indonesian Bank Restructuring Agency IBRA as well as that of Bank Indonesia - the central bank - which approved IBRA's takeover of Bank Bali. The court's decision was based on perceived errors in the way IBRA assumed control of the bank, not on any doubts as to the fundamental legitimacy of its actions.
The move comes after a similar decision last month in which a Jakarta court refused to declare trading company Comexindo bankrupt despite Comexindo's refusal to pay...
