Restructuring of largest debtors delayed<\/p>\n
JAKARTA (JP): The government will not be able to complete a
\nloan restructuring agreement with the 20 largest corporate
\ndebtors of state banks by the April 30 deadline, as promised to
\nthe IMF, chairman of the Jakarta Initiative taskforce Yusuf Anwar
\nsaid on Thursday.<\/p>\n
But he expected the delay would not cause any interruption to
\nthe disbursement of the IMF's bailout loan commitment to the
\ncountry.<\/p>\n
\"I think the International Monetary Fund will be reasonable
\nenough,\" Yusuf told reporters on the sidelines of a seminar on
\ndebt restructuring organized by the Castle consulting group.<\/p>\n
He declined to provide further details.<\/p>\n
The seminar was attended by several debt restructuring experts
\nincluding Thomas Tan of Bank Bali, Aliza Knox of the Boston
\nConsulting Group, John Knight of Chase Manhattan Bank and Frank
\nShea of Bank Danamon.<\/p>\n
The government promised in the latest letter of intent to the
\nIMF that it would restructure 20 of the largest debts to state
\nbanks by April 30.<\/p>\n
The Indonesian Bank Restructuring Agency (IBRA) has assumed
\nover Rp 100 trillion in non-performing loans from the country's
\nseven state banks. The banks are: Bank Rakyat Indonesia, Bank
\nDagang Negara, Bank Bumi Daya, Bank Negara Indonesia, Bank Ekspor
\nImpor Indonesia, Bank Tabungan Negara and Bank Pembangunan
\nIndonesia.<\/p>\n
The loans are believed to have been given to companies owned
\nby the country's politically well-connected businesspeople,
\nincluding former president Soeharto's children and their cronies.<\/p>\n
The companies include PT Chandra Asri Petrochemical Center,
\ncar maker PT Timor Putra Nasional and cement maker PT Semen
\nCibinong.<\/p>\n
Analysts believe the delay in the loan restructuring measures
\ncould further hurt the already low confidence in the economy, as
\nthe international business community could see it as an
\nindication of a stalled economic reform program.<\/p>\n
\"The question now is whether the World Bank and the IMF will
\ncontinue pouring in their money as scheduled,\" said Rino Agung
\nEffendi, an adviser to the Indonesian Debt Restructuring Agency
\n(INDRA).<\/p>\n
Rino admitted that the debt restructuring of the country's
\ncorporate sector has been slower than initially anticipated.<\/p>\n
He explained that the debt restructuring was complicated
\nbecause of the large amount of debt and the great numbers of
\ndebtors and creditors.<\/p>\n
\"They have various different interests and conditions, making
\nit more difficult to encourage them to sit at one table,\" Rino
\nsaid of the parties involved in the restructuring process.<\/p>\n
Minister of Finance Bambang Subianto has turned down demands
\nto convert the non-performing corporate loans with negative
\ncashflow into government equity.<\/p>\n
State banks also rejected proposals for a debt reduction,
\nunless the debtors could pay back the debts with a single
\npayment.<\/p>\n
The government has repeatedly said that debtors who cannot
\nreach an agreement will be liquidated.<\/p>\n
But a government source said it would be problematic for the
\ngovernment to foreclose on the assets of debtors, because their
\nvalue is in most cases lower than the loans themselves.<\/p>\n
\"The government is pushing hard to persuade the debtors to
\nsurrender their valuable assets, many of which are overseas
\nassets,\" he said.<\/p>\n
However, Rino said there are now indications that both debtors
\nand creditors have begun to realize that postponing the
\nrestructuring program will cost them more.<\/p>\n
He pointed out that there are now more indebted companies
\nrequesting that the Jakarta Initiative facilitate negotiations
\nwith their creditors.<\/p>\n
He suggested that the government provide incentives for both
\ndebtors and creditors to work out debt restructuring agreements.<\/p>\n
He added that a decline in domestic interest rates was also a
\nkey factor.<\/p>\n
Indonesia has about US$80 billion in corporate foreign debt,
\nand about Rp 600 trillion in local currency debt.<\/p>\n
The debt restructuring deal is essential for the country to
\nrecover economically. (rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/restructuring-of-largest-debtors-delayed-1447893297",
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