RI's bankruptcy laws ready by August but no quick fix<\/p>\n
SINGAPORE (Dow Jones): Indonesia plans to have bankruptcy laws
\nin place by August, but this and other measures are unlikely to
\nlead to a quick recovery for the embattled country, a state
\nminister told a business conference in Singapore yesterday.<\/p>\n
\"I would simply be pretending if I said that these measures
\nwould result in a quick recovery,\" Tanri Abeng, Indonesian State
\nMinister for the Empowerment of State Enterprises told the Asia
\nLeadership Forum. \"But even the best medicine doesn't work
\novernight, and we should not hold overly big expectations for the
\ntiming of our macroeconomic recovery.\"<\/p>\n
Tanri said Indonesia intends to build the foundations for a
\nstrong sustainable democracy, with a more transparent climate for
\nbusiness as part of the restructuring of its economic and
\npolitical systems.<\/p>\n
Tanri said among the country's top priorities in the short-
\nterm is to fix its ailing banking industry and restructure the
\ncorporate sector.<\/p>\n
The country is working in cooperation with international
\naccounting firms to separate sound banks from weak ones. The weak
\nbanks will either have to be closed, recapitalized or merged with
\nstronger banks, he said.<\/p>\n
He also said the government plans to implement a new banking
\nlaw that will help establish a stronger banking system.<\/p>\n
Two tasks must be completed as part of Indonesia's corporate
\nrestructuring, he said. The private corporate sector must be
\ngiven a framework to restructure its foreign debt and the country
\nmust implement new bankruptcy laws.<\/p>\n
Efforts are underway to resolve the private debt issue, he
\nsaid, noting that a voluntary framework will be constructed
\nthrough the Indonesian Debt Restructuring Agency, which has been
\nagreed to by the country's major creditors.<\/p>\n
\"We realize that the voluntary framework for debt
\nrestructuring will have little impact unless we are able to
\nmodernize our bankruptcy system,\" Tanri said. \"This will happen.\"<\/p>\n
The government set up the Indonesian Bank Restructuring Agency
\nearlier this year as part of its agreement with the International
\nMonetary Fund to help restructure the beleaguered banking system.<\/p>\n
It has since put 28 banks under supervision and has taken over
\nthe management of seven other private banks. Meanwhile, a total
\nof 23 banks have closed down.<\/p>\n
Turning to his own ministry, Tanri said the need to reform
\nstate-owned enterprises has become much more urgent than before.<\/p>\n
There are 160 state-owned businesses in Indonesia with about
\n1,000 subsidiaries, most of which are poorly managed, he said.<\/p>\n
\"Only 30 percent of our state-owned enterprises are rated as
\nfinancially healthy,\" Tanri said. \"Returns on equity are
\nextremely low and most of their product and service offerings are
\nuncompetitive by world standards.\"<\/p>\n
As a first step, the government will divest its stake in 12
\nstate-owned companies during the current fiscal year, he said,
\nadding that these divestments are expected to bring in about US$2
\nbillion. The proceeds will be used to finance the budget deficit,
\nhe said.<\/p>\n
The 12 companies on the for-sale list include five which are
\nlisted on the Jakarta Stock Exchange. The government named
\ninternational investment banks earlier this month to manage the
\nsales.<\/p>\n
Tanri said the longer-term plan is to liberalize and privatize
\nthe rest of the state-owned enterprises.<\/p>\n
The ministry is developing a master plan that will be
\ncompleted in October, he said. It will identify which state-owned
\ncompanies should be privatized, restructured or closed, he said.<\/p>\n
Companies that will stay under government control will also be
\nmade more efficient and competitive, either through financial
\nrestructuring, changing management or modifying the regulatory
\nrequirements, he said.<\/p>",
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