Dropping debt extension plan the right thing: Analsysts<\/p>\n
Dadan Wijaksana, The Jakarta Post, Jakarta<\/p>\n
Analysts welcomed the government's decision to reject a
\ncontroversial plan for allowing debtors under the Indonesian Bank
\nRestructuring Agency (IBRA) extra time to meet repayments, saying
\nthe move respected the public's sense of justice.<\/p>\n
Legal expert Todung Mulya Lubis and Citibank economist Anton
\nGunawan agreed that applying a hard-line approach against the
\npolitically well-connected debtors was the right stance.<\/p>\n
"The decision is clearly a better solution than the extension
\nplan. It's about time these uncooperative debtors get what they
\ndeserve," Todung told The Jakarta Post on Thursday.<\/p>\n
Anton concurred by saying: "I warmly welcome the decision as
\nstern action from the government is what we need right now to
\ndeal with the debtors."<\/p>\n
Earlier on Thursday, the government decided to scrap an IBRA
\nproposed plan to extend the shareholders debt settlement program
\nperiod by up to a maximum of ten years.<\/p>\n
The recalcitrant debtors owe the government a staggering US$13
\nbillion.<\/p>\n
Coordinating Minister for the Economy Dorodjatun Kuntjoro-
\nJakti said that IBRA must stick to the original contracts, adding
\nthat debtors had three months to meet their obligations.<\/p>\n
If they refuse to start paying up, the government may sue them
\nfor bankruptcy and seize their assets, among other possible
\noptions.<\/p>\n
The debt scheme was first agreed to in 1998 between IBRA and
\nthe 33 former bankers whose banks the government bailed out from
\nthe financial crisis.<\/p>\n
Under what is known as the shareholder settlement program,
\ndebtors have up to four years to settle their debts, a deadline
\nwhich for many debtors falls this year.<\/p>\n
The program serves as an umbrella agreement for three payment
\nschemes set up respectively under Master of Acquisition and
\nSettlement Agreements (MSAA), Master of Refinancing and Notes
\nIssuance Agreements (MRNIA) and Deeds of Indebtedness, better
\nknown as APU.<\/p>\n
But the failure to get any repayments under these schemes
\nprompted IBRA to propose extending the program deadline by up to
\n10 years.<\/p>\n
Critics have hit out at the IBRA plan, charging there was no
\nguarantee the debtors would start paying even if their repayment
\nperiod was extended.<\/p>\n
But Todung and Anton warned that it was not enough to simply
\nrely on the old payment schemes.<\/p>\n
Both stressed the need for filtering cooperative debtors from
\nuncooperative ones, that is those who have neglected to make
\npayments, namely the bulk of the debtors under the program.<\/p>\n
"For debtors considered to have met their obligations, we
\nshould respect their rights," Anton said, explaining that they
\nshould be released from all legal charges as agreed under the
\nprogram.<\/p>\n
So far, however, only the Salim Group is said to have complied
\nwith its MSAA after surrendering some Rp 52 trillion worth of
\nassets to IBRA.<\/p>\n
Anton added that the government should also beef up its legal
\npowers so as to be able to confront bad debtors in court.<\/p>\n
"They would certainly look for legal loopholes and the
\ngovernment should be ready for this. We do not want this to end
\nwith the government losing in the courts."<\/p>\n
But the risk of loosing is high given the current corrupt
\nlegal system.<\/p>\n
IBRA's poor track record in three years of trying to force bad
\ndebtors to pay up through litigation should serve as an example.<\/p>\n
The agency has said that out of some 230 court cases it
\nbrought, it has been mainly on the loosing side.<\/p>\n
Elsewhere, the International Monetary Fund (IMF) reportedly
\nhas also praised the decision to drop the debt extension plan.<\/p>",
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"sponsor": "Okusi Associates",
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