Firms must reschedule debt repayment: Expert<\/p>\n
JAKARTA (JP): Companies which cannot repay their much inflated
\nforeign debt because of the currency woes must collectively
\nrenegotiate the rescheduling of debt repayment with creditors,
\neconomist Christianto Wibisono said yesterday.<\/p>\n
Christianto, chairman of the Indonesian Business Data Center,
\nsaid this would help save many companies from defaulting on their
\nloans, as the sharp depreciation of the rupiah against the U.S.
\ndollar made loans unpayable.<\/p>\n
The private sector could cooperate with the Indonesian Chamber
\nof Commerce and Industry, for example, to strengthen their
\nposition to negotiate on the roll-over requirement with foreign
\ncreditors, he said.<\/p>\n
\"The practice would just be like negotiating with a bank to
\nsettle a bad debt, except this would be done on an international
\nscale,\" he said.<\/p>\n
He said the currency crisis was a borderless issue and had
\nturned into an international crisis.<\/p>\n
Attacks on Southeast Asian currencies this week have been the
\nmost powerful since the currencies buckled under massive selling
\njust after the de facto devaluation of the Thai baht on July 2.<\/p>\n
Thailand was forced to allow its currency to slide against the
\ndollar, unleashing the world's worst financial storm since
\nMexico's near-collapse in 1995.<\/p>\n
The floating of the baht followed an effective devaluation of
\nthe Philippine peso, Malaysia's costly but failed defense of the
\nringgit and Indonesia's removal of a regime that kept its rupiah
\nwithin a band against the greenback.<\/p>\n
The free floating of currencies had already immensely eroded
\ntheir value against the dollar.<\/p>\n
The rupiah has declined by over 40 percent against the dollar
\nsince early July.<\/p>\n
Dealers and monetary authorities have said the persistent
\nweakening of the rupiah was partly caused by the high demand for
\ndollars from local companies to refinance their dollar-
\ndenominated debt.<\/p>\n
Government data shows that offshore loans owed by the private
\nsector as of March this year reached US$52.47 billion, while that
\nof state-owned companies reached $3.64 billion. The data does
\nnot say when the debts are due.<\/p>\n
Hamzah Haz, a member of the House of Representatives, urged
\nthe government yesterday to help highly indebted companies to
\nsettle their offshore loans.<\/p>\n
He said the sharp depreciation of the rupiah against the
\ndollar had sharply increased the amount of their loans in terms
\nof rupiah.<\/p>\n
\"This issue must be taken with serious care because the
\nrupiah's depreciation was totally unexpected,\" Hamzah, the
\nchairman of the United Development Party faction in the House,
\nwas quoted by Antara as saying yesterday.<\/p>\n
The rush for dollars made by local companies to repay their
\noffshore loans had partly caused the continued drop in the
\nrupiah, he said.<\/p>\n
\"This psychologically affects people, who then join the rush,
\nand triggers the rise of the dollar even more,\" he said.<\/p>\n
Christianto said the depreciation was even worse than when the
\nrupiah was last devalued in 1986.<\/p>\n
The depreciation of the rupiah was worse than that of the Thai
\nbaht, which started the currency crisis in the region, he said.<\/p>\n
\"Everything has been worsened by the panic sentiment to buy or
\nkeep dollars, which surpasses even a market or economic
\nexplanation,\" Christianto said. (das)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/firms-must-reschedule-debt-repayment-expert-1447893297",
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