Solution to RI private debt vital: German envoy<\/p>\n
JAKARTA (JP): Finding a rapid solution for Indonesia's private
\noffshore debt is of crucial importance in dealing with the
\ncurrent economic crisis, says Horst Kohler, a special envoy of
\nGermany's Chancellor Helmut Kohl.<\/p>\n
Kohler said yesterday he would propose to Kohl to ask German
\nbanks to contribute constructively to a solution to the foreign
\ndebt problem of the Indonesian private sector.<\/p>\n
However, he refused to elaborate what solutions were needed to
\nhelp Indonesian companies cope with their offshore debts.<\/p>\n
\"I'm sorry I cannot elaborate on this point right now,\" he
\nsaid at a media conference held at the German Embassy.<\/p>\n
He said such a thing had to be worked out first. \"We would not
\nlike to confuse the market.\"<\/p>\n
Kohler, who is president of the German Savings Bank
\nAssociation, led a special German delegation comprising Prof.
\nClaus Kohler, a former board member of Deutsche Bundesbank, and
\nKlaus Regling, director general of the Federal Ministry of
\nFinance, to examine and assess Indonesia's economic situation.<\/p>\n
The delegation has been in Jakarta since last week to meet
\nPresident Soeharto, top government officials, the business
\ncommunity, and IMF and World Bank officials.<\/p>\n
According to the Bank for International Settlements, German
\nbanks were the second largest lenders to Indonesia after Japan,
\nwith loans amounting to US$5.6 billion in mid-1997.<\/p>\n
Kohler said it was clear that it was in the interest of
\ninternational lenders to be constructive in regard to the
\nIndonesian private sector overseas debt.<\/p>\n
Asked if German creditors would prefer the Indonesian
\ngovernment take responsibility for the private sector debt, he
\nsaid it was not the intention of the Indonesian government to
\ntransform private debt into public debt.<\/p>\n
\"This is particularly difficult because a large number of
\nenterprises is involved.\"<\/p>\n
\"We welcome that the Indonesian government is currently in the
\nprocess of organizing a dialog between borrowers and lenders,\" he
\nsaid in a media statement.<\/p>\n
However, he said it was also important to avoid a liquidity
\ncrisis and credit crunch, pointing out that if business
\nactivities came to a halt, it would \"harm everything\".<\/p>\n
\"So we think a dialog between lenders and borrowers is the
\nappropriate way to find a good solution,\" he said.<\/p>\n
Concern over Indonesia's alarming level of short-term private
\nsector foreign debt has put the rupiah and the stock market under
\nsevere pressure, despite an announcement by President Soeharto on
\nThursday of drastic economic reforms, backed by the International
\nMonetary Fund (IMF).<\/p>\n
The rupiah dropped through the sensitive 10,000 barrier
\nagainst the U.S. dollar in morning trade yesterday, but
\nstrengthened in the afternoon to close at 9,650. The rupiah has
\nlost over 75 percent of its value since the monetary crisis first
\nhit the country in July last year.<\/p>\n
Reform<\/p>\n
Kohler said the recent economic reforms were bold and
\ncomprehensive. He said a temporary slowdown in economic activity
\nand an increase in inflation was unavoidable in order to lay a
\nsound foundation for stability, new dynamism and rising
\nprosperity for all in the medium term.<\/p>\n
\"We have no doubt that with reforms, Indonesia will overcome
\nits problems and will expect the beginning of a new growth cycle
\nduring the course of next year,\" he said.<\/p>\n
However, he stressed that the most important thing in the
\nimmediate future was to stabilize the rupiah and to regain
\nconfidence in the Indonesian economy.<\/p>\n
\"This requires a decisive and timely implementation of the
\nprogram through concrete action. The President has just told me
\nthat the first set of decrees will be announced shortly.\"<\/p>\n
He said the German delegation had been informed the
\nPresident's economic team was working on a solution to the acute
\nliquidity problem in the Indonesian banking sector. \"This is
\nnecessary in order to avoid a standstill in economic activity in
\nparticular, in the light of the present rupiah exchange rate,
\nwhich is totally undervalued.\"<\/p>\n
He also acknowledged that based on talks with Indonesian
\ngovernment officials, it might be helpful if Germany provided
\nconcrete assistance in the following areas:<\/p>\n
Technical assistance for the preparation of legislation
\nenvisaged in the reform program (for example, a new central bank
\nlaw) and strengthening of banking supervision.<\/p>\n
Special programs to support small and medium enterprises, in
\nparticular, to contribute to an alleviation of the difficult
\neconomic and social conditions expected in the immediate future.<\/p>\n
\"The weakness of the banking sector in Indonesia is one of the
\nmost critical in this crisis. There has to be major restructuring
\nefforts,\" Kohler said.<\/p>\n
He said that since Germany had a well-known central bank, the
\nDeutsche Bundesbank, it was proper for them to provide technical
\nassistance and advice. \"We are confident that Chancellor Kohl
\nwill offer some concrete proposals to President Soeharto in this
\nrespect.\"<\/p>\n
Asked whether Germany would help out Indonesia's aircraft
\nindustry, which is led by the influential State Minister of
\nResearch and Technology B.J. Habibie, Kohler said, \"The project
\nwas never brought up in my talks with the President. And I don't
\nhave a mandate. This is not up to me.\"<\/p>\n
However, he said Habibie had studied in Germany and had a good
\nrelationship with the country. (08)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/solution-to-ri-private-debt-vital-german-envoy-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}