Bambang threatens stubborn debtors<\/p>\n
JAKARTA (JP): Minister of Finance Bambang Sudibyo warned
\nindebted businesspeople on Thursday to cooperate in settling
\ntheir debts to domestic banks or risk the seizure of their assets
\nand legal prosecution.<\/p>\n
The minister said the government would begin taking legal
\naction against recalcitrant debtors next month.<\/p>\n
"We will seize the assets of uncooperative debtors and
\nprosecute these people. This is already a firm decision," he told
\nHouse of Representatives Commission IX on the state budget and
\nfinance during a hearing.<\/p>\n
He said that both Coordinating Minister for Economy, Finance
\nand Industry Kwik Kian Gie and Attorney General Marzuki Darusman
\nhad agreed to such measures.<\/p>\n
Bambang said the Indonesian Bank Restructuring Agency (IBRA)
\nhad so far identified four businesspeople who continued to be
\nuncooperative in settling their debts, including timber tycoon
\nMohamad "Bob" Hasan, the long-time golfing partner of former
\npresident Soeharto.<\/p>\n
He said the government also had decided to provide incentives,
\nincluding tax breaks, to those debtors who cooperated in settling
\ntheir debts.<\/p>\n
Bambang rejected the demand by a number of legislators that
\nthe government reduce the principal of the debts to accelerate
\nthe debt restructuring process.<\/p>\n
"We should not be hasty in providing debt forgiveness," he
\nsaid.<\/p>\n
Golkar Party legislator Paskah Suzetta insisted the government
\nshould provide debtors with relief, saying the government had
\nbailed out the country's banks by financing up to 80 percent of
\nthe bank recapitalization costs.<\/p>\n
He said the indebted companies were being treated unfairly by
\nthe government.<\/p>\n
But Bambang dismissed the idea that the government was bailing
\nout the bankers, pointing out that former bank owners had been
\nforced to surrender their assets to repay the full value of their
\ndebts to the government.<\/p>\n
IBRA manages approximately Rp 220 trillion in nonperforming
\nloans (NPLs) transferred from banks which were closed,
\nnationalized or recapitalized.<\/p>\n
The agency is currently prioritizing the restructuring of some
\nRp 84 trillion worth of NPLs owed by 21 business groups, mostly
\nowned by influential businesspeople.<\/p>\n
In addition to the NPLs under IBRA's management, banks also
\nare struggling to restructure the NPLs under their own
\nmanagement.<\/p>\n
Many people have expressed concern over the slow pace of
\nrestructuring these NPLs. Experts have said restructuring the
\nNPLs was key to the resumption of bank lending to the real
\nsector, and the recovery of the country's crisis-hit economy.<\/p>\n
Bank Indonesia recently relaxed a number of regulations to
\naccelerate the debt restructuring process.<\/p>\n
Deficit<\/p>\n
At the hearing, Bambang also said his office expected the
\nbudget deficit in 2001 to be approximately 3.7 percent of gross
\ndomestic product (GDP), compared to 4.8 percent this year.<\/p>\n
He said domestic revenue, particularly from taxes, must be
\nincreased and spending cut to achieve this lower deficit.<\/p>\n
"The government will try to reduce the deficit because we want
\nto reduce our dependence on foreign loans," Bambang said.<\/p>\n
Indonesia's sovereign loans total some US$75 billion. Several
\nmultilateral and bilateral organizations have provided the loans,
\nincluding the World Bank, the Asian Development Bank, the
\nInternational Monetary Fund and the Consultative Group on
\nIndonesia.<\/p>\n
There have been increasing calls for the government to reduce
\nforeign borrowing, including following the lead of Thailand and
\nending its participation in the IMF-led economic bailout program.<\/p>\n
The IMF has promised the current administration some $5
\nbillion in loans to help finance the country's three-year
\neconomic reform program. The fund so far has disbursed more than
\n$700 million.<\/p>\n
The state budget is currently under pressure, particularly due
\nto the huge cost of the country's bank restructuring and
\nrecapitalization program.<\/p>\n
Bambang also told legislators his office was drafting a new
\nlaw to boost the independence and effectiveness of the country's
\ncapital market supervisory agency, Bapepam. He said the law would
\ninclude stronger sanctions for violations of capital market
\nregulations.<\/p>\n
Bambang said his office would soon seek the green light from
\nthe President to proceed with the drafting of the law, adding
\nthat the draft was expected to be submitted to the legislature by
\nNovember. (rei)<\/p>",
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