IMF, WB to provide help in private debt issues<\/p>\n
JAKARTA (JP): Indonesia will receive technical assistance from
\nthe IMF, World Bank and the Asian Development Bank in handling
\nits corporate foreign debt problems, an Indonesian debt official
\nhas said.<\/p>\n
Radius Prawiro, chairman of the Corporate Foreign Debt
\nSettlement Team, said yesterday the three international financial
\ninstitutions would help hasten the progress of solving the debt
\ncrisis.<\/p>\n
The team and representatives of Indonesia's private debtors
\nand foreign lenders held their first meeting yesterday.<\/p>\n
IMF, World Bank and Asian Development Bank officials were also
\npresent at the meeting.<\/p>\n
"It was a constructive and friendly meeting," Radius said
\nafter the talks, which were attended by 13 international bank
\nlenders.<\/p>\n
The 13 foreign banks have agreed to become members of a
\nforeign lenders' committee set up to help restructure the
\nstaggering debt of the private companies.<\/p>\n
Radius said the role of the foreign lenders "steering
\ncommittee" was to liaise with other foreign banks and negotiate
\nwith a committee representing local debtors, former minister
\nRadius said after the first meeting of the two bodies.<\/p>\n
European and Japanese banks on the lender steering committee
\nwould include Standard Chartered, ABN Amro, Banque Nationale de
\nParis, Deutsche Bank, Bank of Tokyo, Sanwa Bank and Sumitomo
\nBank.<\/p>\n
Other banks include Overseas Chinese Banking Corp., Hongkong
\nand Shanghai Banking Corp. and Korea Development Bank.
\nNorth American banks on the list are Bank of America, Citibank
\nand Chase Manhattan Bank.<\/p>\n
"All parties have agreed to work on a non-stop basis to reach
\nspeedy and constructive solutions for the private sector," he
\nsaid after the meeting.<\/p>\n
He explained that since President Soeharto appointed him to
\nhis position in January, he has created a technical team to
\ninventory the country's private corporate debt to understand the
\nsector's obligations.<\/p>\n
He added that all parties involved must provide transparent
\nand comprehensive information to his team and Bank Indonesia, the
\ncentral bank.<\/p>\n
Indonesia's legal and regulatory framework -- including
\ncontract enforcement laws, regulations on the seizure and sales
\nof collateral, and bankruptcy rules -- will soon be strengthened,
\nRadius said.<\/p>\n
"The country's bankruptcy law will be replaced ... it's a
\nproduct of 1905," he said.<\/p>\n
The meeting discussed the need to ensure that borrowers able
\nto pay back loans do so according to original agreements or to
\ntheir best ability to maximize debt recovery by creditors.<\/p>\n
It was understood that certain ailing private companies would
\nneed to have debt pressures brought to sustainable levels.<\/p>\n
Participants also said there needed to be an immediate focus
\non troubled borrowers in the export industry which employed
\nsubstantial numbers of workers.<\/p>\n
Radius, however, reaffirmed that the government would not bail
\nout companies or directly intervene to solve their debt problems.<\/p>\n
Bank Indonesia recently unveiled updated figures for
\nIndonesia's external debts. The country's foreign debt as of the
\nend of 1997 totaled US$136.09 billion, lower than the $137.4
\nbillion announced by Radius on Jan. 6.<\/p>\n
Private sector debt was updated to $68.31 billion, compared to
\nthe earlier figure of $74 billion.<\/p>\n
The debt share of private domestic companies, however, jumped
\nto $30.12 billion, a significant increase compared to the
\nprevious announcement of $23 billion.<\/p>\n
Radius said he would update the public on debt figures and the
\ndebt-solving process every two weeks.<\/p>\n
The alarming level of Indonesia's corporate foreign debts has
\nbeen a major factor in causing the plunge of the rupiah against
\nthe U.S. dollar. The rupiah value has dropped by some 75 percent
\nfrom its July level of Rp 2,450. (08)<\/p>",
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"sponsor": "Okusi Associates",
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