Goh urges multirateral guarantee for RI L\/Cs<\/p>\n
JAKARTA (JP): Singapore Prime Minister Goh Chok Tong proposed
\nyesterday the establishment of a multilateral committee to
\nguarantee letters of credit (L\/Cs) issued by Indonesian banks to
\nhelp Indonesia finance badly needed imports.<\/p>\n
Goh flew into Jakarta yesterday to review Indonesia's economic
\ncrisis with President Soeharto.<\/p>\n
He told a joint media briefing after the 90-minute meeting at
\nSoeharto's Jl. Cendana residence that a multilateral committee
\ncould guarantee far more funds in L\/Cs than a bilateral
\narrangement could.<\/p>\n
Such an arrangement could be expected to generate US$20
\nbillion in letters of credit, he said, adding the guarantees
\nwould be given to foreign banks who would accept the letters of
\ncredit.<\/p>\n
Goh said he would still have to work on the concept but hoped
\nto proceed "to unlock the international financial system for
\nIndonesia. This is very important."<\/p>\n
Indonesian importers have complained that their L\/Cs issued by
\nlocal banks were rejected by foreign banks over fears that they
\ncould not service their commitments.<\/p>\n
"We are facing a lack of confidence, so we have to ask other
\ncountries to also guarantee our letters of credit," Soeharto
\nsaid.<\/p>\n
Goh will fly back to Singapore today. Soeharto is also
\nscheduled to meet with World Bank President James Wolfensohn
\ntoday.<\/p>\n
Tanri Abeng, a member of the President's Economic and Monetary
\nResilience Council, stressed yesterday the importance of a
\ncomplete inventory of private sector foreign debts and their
\nmaturity schedules.<\/p>\n
Tanri, chief operating officer of the Bakrie Brothers Group,
\nsaid reports on private sector external debts had so far been
\nconflicting, thereby confusing the market as to the magnitude of
\nthe debt overhang.<\/p>\n
"We need to communicate to the market a complete profile of
\nour private sector foreign debts, including details such as how
\nmuch will mature this year," he said after meeting Soeharto.<\/p>\n
The government has proposed a temporary freeze on the
\nservicing of private sector debt to create breathing room for
\ncompanies to negotiate with their creditors.<\/p>\n
Tanri said analysts were still unclear over the details of the
\nprivate debt situation.<\/p>\n
Private sector foreign debt is estimated at $65 billion.<\/p>\n
"But obviously, not all of these debts mature this year,"
\nadded Tanri.<\/p>\n
He said he would meet with Radius Prawiro, the President's
\nadvisor on the settlement of private sector debts, as soon as the
\nlatter returned from his talks with Japanese bank lenders in
\nTokyo.<\/p>\n
"Our first priority will be to get the complete profile of the
\ndebts with their maturity schedules and to communicate this
\ninformation to the market.<\/p>\n
"This information is quite vital because the amount of foreign
\ndebt which will mature this year will strongly influence the
\ndemand for American dollars. And as long as this data is not
\navailable to the market, the foreign exchange market here may
\nremain wildly volatile," Tanri said.<\/p>\n
According to Tanri, the private sector foreign debt should
\nalso be categorized according to their borrowers: multinational,
\njoint venture and private national companies.<\/p>\n
"Obviously, Radius' team should not be involved in
\nfacilitating negotiations concerning debts of multinational
\ncompanies. It should instead zero in on the debts of private
\nnational companies and the Indonesian partners of joint venture
\ndebtors," Tanri added.<\/p>\n
In a related development, the Nikkei English language news
\nservice reported that Radius suggested in Tokyo on Monday that 11
\nmajor Japanese banks roll over foreign currency-denominated loans
\nto Indonesian corporations.<\/p>\n
Radius said he sought the understanding of Japanese banks as
\nthey prepare for negotiations on rolling over Jakarta's foreign
\ncurrency-denominated loans in early February, according to
\nNikkei. (prb\/vin)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/goh-urges-multirateral-guarantee-for-ri-lcs-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}