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.