Experts doubt IBRA's ability to recover Rp 100t in bad debts<\/p>\n
JAKARTA (JP): Economists and financial observers have doubted
\nthe ability of the Indonesian Bank Restructuring Agency (IBRA) to
\nrecover over Rp 100 trillion (about US$11.5 billion) in bad loans
\ntaken over by the central bank from the country's seven state
\nbanks.<\/p>\n
Economist Didik J. Rachbini said on Saturday IBRA would have
\ndifficulty recovering the bad debts not only because of the
\nfinancial difficulties of the debtors, but also because of the
\npoor quality of the loan collateral.<\/p>\n
He believed that the value of the assets used by debtors to
\nsupport their loans was substantially lower than the value of the
\noutstanding debts.<\/p>\n
The surprisingly low value of the assets, mostly land, office
\nbuildings and real estate, was not merely caused by falling
\nprices but was more due to the initial exaggerated estimates of
\nthe value of the assets, he said.<\/p>\n
\"Borrowers might have marked up the value of their collateral
\nin order to get bigger bank loans,\" he told The Jakarta Post.<\/p>\n
IBRA announced on Thursday it had assumed over Rp 100 trillion
\nin nonperforming loans provided by the seven state banks. The
\nloans were taken out by some 1,200 debtors from Bank Bumi Daya,
\nBank Dagang Negara, Bank Pembangunan Indonesia, Bank Tabungan
\nNegara, Bank Ekspor Impor Indonesia, Bank Rakyat Indonesia, and
\nBank Negara Indonesia.<\/p>\n
The bad loans, nearly half of the banks' outstanding credits,
\nwill be handled by the agency's asset management unit.<\/p>\n
IBRA deputy chairman Eko S. Budianto said the nonperforming
\nloans would be removed from the loan portfolios of the seven
\nstate banks so the banks could concentrate their resources on
\nmanaging remaining productive assets.<\/p>\n
However, he added that the transfer of the bad assets to IBRA
\nwould not automatically lead to the liquidation of the corporate
\ndebtors.<\/p>\n
\"Debtors who show good faith and still have good business
\nprospects will be helped to continue their operations through
\ncredit restructuring,\" he said.<\/p>\n
He said IBRA would attempt to collect the debts, saying the
\nagency would \"vigorously pursue\" borrowers.<\/p>\n
Senior banker I. Nyoman Moena doubted the relatively new
\nagency with no debt restructuring experience could effectively
\nhandle the restructuring task.<\/p>\n
\"IBRA is currently doing the difficult task of restructuring
\nthe country's banks. The new workload of restructuring the debts
\nof seven state banks, in the amount of Rp 100 trillion, would be
\na great burden for IBRA,\" he told the Post.<\/p>\n
He suggested that IBRA recruit experienced professionals to
\nbolster its debt restructuring team.<\/p>\n
Nyoman insisted that if criminal conduct is found in the
\ngranting of the loans, prompt measures need to be taken (to
\nprosecute) according to the existing laws.<\/p>\n
\"Basically, a debtor company needs to be rescued if possible.
\nIf not, liquidation is unavoidable,\" he added.<\/p>\n
Bank Indonesia Governor Sjahril Sabirin told the press last
\nweek that the government would prioritize out-of-court debt
\nsettlements, but added that bankruptcy proceedings would be taken
\nif necessary.<\/p>\n
Didik, however, doubted that the country's commercial court
\ncould produce a satisfactory decision.<\/p>\n
\"The commercial court is relatively new, and the judges are
\nmostly nervous,\" he said.<\/p>\n
Many have criticized the commercial court for its rulings
\nallowing several debtors off the hook.<\/p>\n
Didik also urged that debtors who could be proven to have
\nunlawfully acquired their loans to be punished under criminal
\nlaw.<\/p>\n
The large number of bad debts have pushed the state banks into
\ntechnical bankruptcy, but they remain in operation because of the
\ngovernment's financial support and guarantees.<\/p>\n
Recent press reports said a large number of the biggest
\ndrawers of state bank loans are politically connected
\nbusinessmen, including the children and friends of former
\npresident Soeharto.<\/p>\n
Reports said that Soeharto's youngest son, Hutomo Mandala
\nPutra, owed a total of $400 million and Rp 1.7 trillion to Bank
\nBumi Daya, Bank Dagang Negara, Bank Ekspor Impor Indonesia, and
\nBank Pembangunan Indonesia.<\/p>\n
Soeharto's second son, Bambang Trihatmodjo, and his
\nassociates, reportedly owe the four banks $2.7 billion and Rp 1.9
\ntrillion between them.<\/p>\n
Businessman Prajogo Pangestu, one of Soeharto's cronies, was
\nreported to owe Rp 2.6 trillion to the banks. (rei\/02)<\/p>",
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