A who's who of debtors<\/p>\n
The 200 largest corporate debtors, who are partly responsible
\nfor leading virtually every major domestic bank, including the
\nseven state banks, into technical bankruptcy, were finally
\nannounced through newspaper advertisements on Tuesday. However,
\nthe announcement, made after several delays, did not provide much
\nnew information to those who have regularly perused newspaper
\nstories over the past few months about the problem of bad-debt
\noverhang in Indonesia's private and state banks.<\/p>\n
The lists of the largest debtors, announced separately by the
\nIndonesian Bank Restructuring Agency (IBRA), state banks and
\nmajor private banks, disclosed only the names of the corporate
\ndebtors. They did not provide further details, including the
\namount of debt owed by individual companies and the majority
\nshareholders of the companies. The debtors were simply listed in
\norder of the size of their debt, known only to the creditors,
\nthough it has long been public knowledge that the 200 largest
\ndebtors between them have more than Rp 300 trillion (US$37.5
\nbillion) in bad loans. In the absence of a corporate registry
\nagency in the country, it will require a great deal of research
\nto discover the owners of the companies because most of them are
\nnot traded on the Jakarta Stock Exchange and are therefore not
\nsubject to stringent disclosure requirements.<\/p>\n
But many of the company names, particularly those at the top
\nof the lists, are already quite familiar to the public because
\nthey have been the subject of mass media headline stories every
\ntime the issue of bad bank loans has been raised over the past
\nfew months. Most of the largest debtors are former president
\nSoeharto's children and cronies, as well as large business
\ngroups.<\/p>\n
Nonetheless, the mere disclosure of the names of the corporate
\ndebtors -- though made under pressure from the International
\nMonetary Fund (IMF) -- is a significant step toward enhancing
\ntransparency in the banking industry, a principle which has
\nstubbornly been sidestepped by most banks under the pretext of
\nsafeguarding banking secrecy.<\/p>\n
Most banks seem to have encountered great difficulty in
\npersuading the debtors to enter serious debt-restructuring
\nnegotiations, as can be seen from the footnote in each of the
\nannouncements inviting the debtors to immediately begin
\nnegotiations with their respective creditors.<\/p>\n
Minister of Finance Bambang Subianto said on the eve of the
\nannouncement that the publication of the names of the largest
\ncorporate debtors was aimed at expediting the recovery of loans.
\nBambang did not explicitly say so, but one could easily deduce
\nthat the announcement was meant to pressure or shame debtors into
\nsettling their liabilities.<\/p>\n
Many people have doubted the government's seriousness and
\npolitical will in dealing firmly with the corporate debtors
\nbecause of their political connections. In fact, it took pressure
\nfrom the IMF to force the government to take firm action against
\nrecalcitrant debtors.<\/p>\n
However, with or without IMF pressure, the government now has
\nno alternative but go all out to recover the bad debts at
\ndomestic banks if it is truly serious about reviving the banking
\nindustry and reinvigorating the economy. Since the government is
\nnow the majority shareholder in almost all major domestic banks,
\nloan recovery, either through restructuring or liquidation, is
\nits responsibility.<\/p>\n
It is obvious that without resolving the problem of bad loans,
\nmost major banks will never recover from their technical
\nbankruptcy, despite the government's $44 billion recapitalization
\nprogram, and the economy will remain depressed as new lines of
\ncredit will remain closed to most companies.<\/p>\n
Recovering a large portion of the bad debt is also crucial to
\nprevent a fiscal deficit explosion in one to two years. The
\ngovernment's debt -- more than $85 billion in overseas debt and
\nthe equivalent of $50.8 billion in domestic liabilities resulting
\nfrom the issuance of treasury bonds for the recapitalization of
\nbanks -- poses so huge a burden to the state budget that part of
\nthe liabilities must be settled with the proceeds from the
\nrecovery of loans, otherwise the central bank will have to print
\na huge amount of money at the peril of the entire economy.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/a-whos-who-of-debtors-1447893297",
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"sponsor": "Okusi Associates",
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