22 SMEs win approval to restructure debts

JAKARTA (JP): Twenty-two small and medium enterprises (SMEs) with Rp 15.53 billion in outstanding debts have won approval from their respective creditors to restructure their debts.

The companies are part of the 114 SMEs registered with the Jakarta Initiative Task Force, the government-sponsored agency that facilitates the debts of the private sector.

The Jakarta Initiative chief operating officer, Joseph Luhukay, said on Friday that he hoped 29 more SMEs, with total outstanding debts of Rp 64 billion, would soon sign similar debt agreements.

The 29 companies have reached an initial agreement with their respective bankers to restructure about Rp 12.5 billion of their total debts, he said.

The companies include PT Karya Putra Pahlawan, which owes Rp 132 million to Bank Mandiri, PT Menara Garmentama which owes Rp 176 million also to Bank Mandiri, and PT Miasti Mungpratama which owes Rp 500 million to Bank Rakyat Indonesia.

Joseph said the Jakarta Initiative often faced difficulties in facilitating debt restructuring of SMEs because most of the companies did not have reliable financial reports.

"We will cooperate with the economic faculty of Trisakti University to help the SMEs prepare their financial reports," he told a media briefing.

Some 2,200 private Indonesian companies have US$67 billion in foreign debt and Rp 300 trillion in domestic debt.

Most companies stopped servicing and repaying their debts after the rupiah's exchange rate plunged by about 80 percent last year.

The government launched the Jakarta Initiative Task Force in September 1998 to encourage debtors and creditors to reach out-of-court debt settlements, a result preferred by the government as the alternative of bankruptcy would lead to mass layoffs.

Three hundred and four companies, with total outstanding debts of $23.20 billion and Rp 14.62 trillion, have joined the debt relief scheme provided by the Jakarta Initiative.

Of this number, 190 are large companies with total debts of $23.19 billion and Rp 14.43 trillion, while 114 others are SMEs with total debts of $1.02 million and Rp 197.62 billion.

Joseph said that of the large corporate debtors, 24 firms with total debt of $3.25 billion and Rp 2.27 trillion had reached debt restructuring agreements with their respective creditors. (udi)