New debt restructuring scheme for SMEs out in March<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
Responding to snags in recovering some Rp 39 trillion (about
\nUS$3.8 billion) of debts from small and midsize enterprises
\n(SMEs), the government is drafting a new debt restructuring
\nscheme for SMEs due out by the end of March.<\/p>\n
The new plan could see SME debtors get a 100 percent cut on
\ninterest and penalty payments, and possibly a 50 percent debt
\nreduction.<\/p>\n
If approved, it will replace the current debt payment scheme
\nset to expire in April. The present scheme also grants a 100
\npercent cut on interest and penalty payments, but limits debt
\ncuts to only 25 percent.<\/p>\n
Plans for a new debt restructuring scheme comes amid protests
\nby SME debtors fearing their assets could be sized and auctioned
\noff by IBRA and bank creditors once the April deadline passes
\nwithout a settlement.<\/p>\n
Minister for Cooperatives Alimarwan Hanan said he had also
\nproposed slapping a one-year suspension on the sale of seized SME
\nassets.<\/p>\n
He said that during that year, debtors who show prospects for
\npayment should be allowed a debt restructuring deal.<\/p>\n
\"For others who simply cannot pay, we're sorry to say that we
\nwill auction off their assets,\" Alimarwan told reporters after he
\npresented the plan to President Megawati Soekarnoputri.<\/p>\n
Under the new plan, Alimarwan said that SMES able to settle
\ntheir debts upfront and in cash, should be allowed a 50 percent
\ndebt cut.<\/p>\n
\"If they can settle (at least 60 percent) of their debt within
\na year, they should be given a 40 percent debt haircut,\" he
\nadded.<\/p>\n
Those categorized as SMEs have debts to the government that
\ntotal about Rp 5 billion.<\/p>\n
At present, there are some 414,000 small debtors that owe Rp
\n39.61 trillion to IBRA, state-owned banks and the directorate
\ngeneral for accounts receivable and state auctioning.<\/p>\n
Many debtors failed to pay even though they had the money
\navailable, as banks from which they took the loans went bust
\nduring the financial crisis.<\/p>\n
Their loans changed ownership, with most ending up at the
\nIndonesian Bank Restructuring Agency (IBRA) and some state-owned
\nbanks.<\/p>\n
Confusion over whom to pay how much, has hindered debtors from
\nsettling their debts. Over time, however, their debts have
\nswelled in line with soaring interest rates.<\/p>\n
Bank analyst Mirza Adityaswara said small debtors should not
\nbe discriminated against in relation to their larger counterparts
\nin IBRA, for whom the government may extend the debt payment
\nperiod to by up to six years.<\/p>\n
But he suspected that a large portion of the SME debtors were
\nin fact private debtors with consumer loans.<\/p>\n
Bank Danamon has claimed that some 90 percent of the SME loans
\nit had purchased from IBRA were indeed not SMEs.<\/p>\n
Some of them were consumer loans and the bank now has trouble
\ncollecting these.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/new-debt-restructuring-scheme-for-smes-out-in-march-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}