Economic reform target dates<\/p>\n
The following is the target dates for Indonesia's economic
\nreform package under the latest agreement between the government
\nand the International Monetary Fund.<\/p>\n
Box 1. Updated Financial Sector Reform Agenda<\/p>\n
I. Loan collection and asset recovery<\/p>\n
1. State banks and AMU<\/p>\n
* Complete setting monthly asset collection targets
\nfor all banks. Target date: June 30.<\/p>\n
* Identify and publicly invite 20 largest consolidated
\nnonperforming borrowers of each state and IBRA bank
\nand the AMU for negotiations. Status: Initiated<\/p>\n
* Develop resolution strategies for largest borrowers. Target
\ndate: June 30.<\/p>\n
* Take appropriate legal actions against recalcitrant
\nborrowers. Target date: August 30.<\/p>\n
2. IBRA<\/p>\n
* Draw up quarterly timetable for the resolution of AMU
\nand other assets through March 2000. Target date: June 30<\/p>\n
* Complete classification of assets by resolution strategy
\n(sale, foreclosure, or negotiated restructuring). Target date:
\nJune 30<\/p>\n
* Complete transfers of shareholders' assets from 1998 BTO
\nand BBO banks to holding companies. Target date: June 30<\/p>\n
* Begin retaining private sector specialists to assist
\nwith loan recoveries. Target date: June 30<\/p>\n
II. State Bank and IBRA Banks restructuring<\/p>\n
1. Bank Mandiri<\/p>\n
* Implement voluntary severance scheme for staff of
\ncomponent banks. Status: On track; to be completed by March 31,
\n2000.<\/p>\n
* Establish centralized treasury unit and credit
\nfunction. Status: Treasury already centralized; large corporate
\ncredits to be centralized by end-May.<\/p>\n
* Include international bank in management of loan
\nrecovery, and sign performance contracts with top
\nmanagement, incorporating collection targets. Target date: May 28.<\/p>\n
* Recapitalize Bank Mandiri in line with progress in
\noperational and financial restructuring. Target date: May 1999-March
\n2000.<\/p>\n
2. Other state banks (BNI, BRI, and BTN):<\/p>\n
* Strengthen top management. Status: Underway<\/p>\n
* Engage international firms to provide management
\nand advisory services. Target date: June 30.<\/p>\n
* Include international bank in management of loan
\nrecovery. Target date: June 30.<\/p>\n
* Prepare business plans, in consultation with advisors. Target
\ndate: August 15.<\/p>\n
* Sign performance contracts with top management. Target date:
\nAugust 30.<\/p>\n
* Recapitalize in line with progress in restructuring. Target
\ndate: Sept. 1999-March 2000.<\/p>\n
3. Original BTO banks (BCA, Danamon, PDFCI, Tiara)<\/p>\n
* Finalize acceptable business plans for all four banks. Target
\ndate: June 30.<\/p>\n
* Sign performance-based management and regulatory
\ncontracts for BCA and Danamon. Target date: July 15.<\/p>\n
* Legally merge PDFCI into Danamon. Target date: July 31.<\/p>\n
* Operationally merge PDFCI into Danamon. Target date: September
\n30.<\/p>\n
* Resolve Bank Tiara. Target date: After midyear.<\/p>\n
* Offer BCA and Danamon for sale. Target date: By March 2000.<\/p>\n
4. New BTO banks (March 13)<\/p>\n
* Commence negotiations for settlements of connected
\nlending with former controlling shareholders. Target date: May 28.<\/p>\n
* Remove majority shareholders rights. Status: Effectively done.<\/p>\n
* Develop least cost resolution strategies, excluding
\nstand-alone recapitalization. Target date: July 31 .<\/p>\n
III. Private bank restructuring<\/p>\n
1. Recapitalization of viable private banks<\/p>\n
* Settle eligible interbank claims. Target date: May 28.<\/p>\n
* Sign recapitalization agreements. Target date: May 28.<\/p>\n
* Issue government bonds to banks whose private owners
\nhave provided their necessary capital share on original
\nestimates. Target date: May 28.<\/p>\n
* Issue additional bonds to complete recapitalization to
\nthe amounts specified in the updated financial reviews
\nby international auditors together with additional
\nprivate capital. Target date: June 30.<\/p>\n
2. Comprehensive review of A category banks<\/p>\n
* Ensure that all owners, managers and directors of
\nA-category banks conform to the fit and proper test. Target
\ndate: July 31.<\/p>\n
* Take appropriate action against individuals who have
\nfailed the fit and proper test (by violating laws or
\nBI regulations). Target date: July 31.<\/p>\n
* Complete review of business plans. Target date: May 28.<\/p>\n
IV. Legal, Regulatory, and Supervisory Framework<\/p>\n
* Establish the Independent Review Committee for IBRA. Status:
\nDone.<\/p>\n
* Sign implementing regulations for Banking Law
\namendment. Status: Done.<\/p>\n
* Complete strategic plan for strengthening BI's
\nregulatory, supervisory, and examination activities. Target date:
\nJune 30.<\/p>\n
* Complete detailed review of banking law and
\nregulations. Target date: Sept. 30.<\/p>\n
* Issue new prudential regulations on commercial banks,
\nforeignbranches, license revocation and bank
\nliquidation. Target date: Sept. 30.<\/p>\n
* Complete diagnosis of the offsite supervision system. Target
\ndate: Sept. 30.<\/p>\n
Box 2. Loan Recovery Strategy for the 20 Largest Nonperforming<\/p>\n
Borrowers of Each of the 7 State Banks, the 12 IBRA Banks,
\nand IBRA's AMU<\/p>\n
Institutional framework (May 1999)<\/p>\n
* Establish loan recovery unit in each bank and start
\nsetting monthly recovery targets.<\/p>\n
* Intensify loan collection efforts focused on the 20
\nlargest borrowers of each bank.<\/p>\n
* Establish interagency committee chaired by Ministry of
\nFinance on loan recovery to ensure consistent and
\ncoordinated approach to loan recovery and restructuring.<\/p>\n
* Complete transfer of all loan documentation (on
\ntransferred assets) to IBRA.<\/p>\n
* Sign agreement between IBRA and state banks regarding
\ncustodian role for original collateral document.<\/p>\n
Development of strategy (May 1999)<\/p>\n
* Identify and complete documentation of 20 largest
\nborrowers by each bank.<\/p>\n
* Consolidate accounts by borrowing group.<\/p>\n
* Classify groups into one of four categories based on
\nfinancial prospects and expected degree of cooperation, and
\ndifferentiate resolution strategy accordingly.<\/p>\n
* Finalize monthly loan recovery targets for each bank and
\nthe AMU.<\/p>\n
* Prioritize cases by size of group debt.<\/p>\n
Implementation of strategy<\/p>\n
June 1999<\/p>\n
* By June 1, publicly invite borrowing groups to resume debt
\nservice or agree to start negotiation within two weeks.<\/p>\n
* Form creditor committees, with external creditors, in
\naccordance with Jakarta Initiative.<\/p>\n
* Recommend stand still, when appropriate.<\/p>\n
* Appoint financial advisors, auditors, and legal advisors
\nto help develop strategies.<\/p>\n
* Start due diligence.<\/p>\n
* Publish names of borrowing groups who do not cooperate.<\/p>\n
* Start restructuring negotiations.<\/p>\n
August 1999<\/p>\n
* Establish timetable for remaining steps of debt
\nnegotiation or take appropriate legal action (including
\nbankruptcy filings) for non-cooperating borrowing group.<\/p>\n
* Review strategy with the IMF, World Bank, and the ADB.<\/p>\n
* Repeat above strategy for the next 20 largest nonperfoming
\nborrowers of each bank.<\/p>\n
Box 3. Updated Corporate Restructuring Agenda<\/p>\n
* Issue consolidated Directorate General Circular on tax
\ntreatment of corporate restructuring and Ministry of Finance
\ndecree on tax treatment of land\/buildings transfer. Target date:
\nMay 28.<\/p>\n
* Conduct high-level meeting of member agencies of one-stop
\nfacilitation process, formulate overall strategy, and
\nestablish rules and procedures for approval of regulatory
\nfilings. Status: Initiated<\/p>\n
* Complete conditions for effectiveness of World Bank
\ntechnical assistance loan. Target date: May 28.<\/p>\n
* Retain at least 20 facilitators for Jakarta Initiative
\nTask Force (JITF). Target date: June 30.<\/p>\n
* Submit to Parliament arbitration and secured transactions
\nlaws. Status: Done<\/p>\n
Box 4. Updated Bankruptcy Reform Agenda<\/p>\n
* Sign into law new anti-KKN (corruption, collusion and
\nnepotism) legislation. Target date: May 28.<\/p>\n
* Issue decrees and regulations to implement law. Target date:
\nJune 30.<\/p>\n
* Issue Steering Committee's proposed procedures for
\nassignment of ad hoc judges to actual cases before
\nthe Commercial Court. Target date: June<\/p>\n
* Implement judicial salary proposal of the Commercial
\nCourt Steering Committee. Target date: June<\/p>",
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