Aid for RI corporate restructuring sought
Aid for RI corporate restructuring sought
TOKYO (Bloomberg): Ginandjar Kartasasmita, Indonesia's chief economics minister, asked on Friday for financial aid to restructure Indonesia's corporate sector at a meeting with Japan's Finance Minister Kiichi Miyazawa.
This was one of his five proposals for Japanese aid to help the ailing Indonesian economy. Ginandjar is in Tokyo for talks with Japanese government officials to seek aid from the US$30 billion fund that Japan has pledged to bolster the recession-hit Asian economies.
"Financial aid to help restructure the corporate sector is the highest priority," said Ginandjar. He also asked Miyazawa for money to help develop the country's infrastructure, to continue support for the poor, to help small and medium size enterprises which are the backbone of the economy, and for the development of a credit guarantee plan.
Miyazawa said Japan would like to continue its financial support to Indonesia, although neither minister specified the amount of aid requested.
Ginandjar said Japan will send a technical team of three experts to the Bank of Indonesia to help it fix the Indonesian banking system. "The experts will be sent as soon as possible," Ginandjar said.
Miyazawa Initiative
Miyazawa announced his "initiative" to set up the $30 billion fund while attending a Group of Seven industrial nations' meeting in Washington on Oct. 3.
Japan is being pressed by other G-7 members to do more to stimulate its economy and help pull the rest of Asia out of the economic crisis.
Japan plans to use half of the $30 billion fund for short-term capital needs and with the remainder for longer term measures to boost the ailing economies. The Export-Import Bank of Japan will purchase Asian government debt and provide loan guarantees and trade credit guarantees, as part of the aid package.
Ginandjar also met Export-Import Bank of Japan officials later in the evening to discuss implementation of the credit-guarantee plan.
He said the recent strengthening of the rupiah allowed room for interest rate cuts which would help to alleviate the high levels of bad debt in the economy. "We will see further reductions in interest rates if the current rupiah rate holds, and there is no reason why it should not," the minister said.
"We have no intentions to act to strengthen the rupiah, nor have we any intentions to weaken the rupiah," Ginandjar said.
"We will be happy if the rupiah strengthens again, but don't think that we are going to effectuate it."
The Indonesian rupiah traded as high as 2,362 to the dollar in 1997 before the Asian currency crisis, triggered by the devaluation of the Thai baht in July last year. The rupiah plummeted as much as 86 percent to a low of 16,650 to the dollar last June. It recently traded at 7,700.