Bad debtors face tougher measures

JAKARTA (JP): Finance Minister Bambang Subianto vowed on Tuesday to take tougher measures against the worst debtors of domestic banks who fail to reach a loan recovery plan by the end of this month with the Indonesian Bank Restructuring Agency (IBRA).

He expected the first batch of bad debtors to make significant progress at their talks with the agency in one month's time.

"There are more drastic measures that we won't use right now because we're still hoping for the good will of the debtors to negotiate (for a loan workout strategy )," he told a press conference.

"We will at least make a review on several of the worst debtors this month, and another batch next month," he added.

Many have doubted whether IBRA could recover the massive amount of nonperforming loans both at state banks and private banks now controlled by the government as the debts are mostly owed by well-connected businessmen.

The government has also been criticized for its slowness in recovering bad debts, raising speculation that it has surrendered to pressure from the businessmen.

Bambang's comments followed IBRA's announcement earlier in the day of the top 200 worst debtors. IBRA controls nonperforming assets of 25 major banks, including seven state banks. The agency also manages all the assets of the closed private banks.

IBRA said in several newspaper advertisements which listed the worst debtors, that it was inviting the debtors to continue or start renegotiation with the agency on how to recover nonperforming loans.

"These debtors which have not yet started talks are urged to send a formal letter to the agency to ask for a meeting to discuss their obligations," IBRA said.

IBRA corporate secretary Christovita Wiloto said that the 200 debtors in the agency's list were the worst among the 1,700 debtors with total nonperforming loans of over Rp 150 trillion (US$18.75 billion) now in the hands of IBRA.

The agency, however, didn't disclose the amount of bad debts of the 200 debtors nor the owners of the indebted companies.

The IBRA list included companies owned by the family of former president Soeharto and its cronies as well as other large business groups.

Car maker PT Timor Putra Nasional, the controversial car project of Soeharto's youngest son Hutomo "Tommy" Mandala Putra, was the second worst debtor after PT Gerak Maju, a unit of the Mantrust Group.

According to the May 17 issue of the Warta Ekonomi weekly, Timor has some Rp 3.4 trillion in debts.

The other Soeharto-linked indebted companies include petrochemical center PT Chandra Asri, satellite operator PT Pacific Satelit Nusantara, textile company PT APAC Inti Corpora and port operator PT Humpuss Terminal Petikemas.

Other debtors are companies owned by Soeharto's cronies including Mohammad Bob Hasan and Prajogo Pangestu.

Companies owned by the country's conglomerates include the, Bakrie Group, Lippo Group, and the Tirtamas Group are also included on the list.

Aircraft maker PT IPTN, the pet project of President B.J. Habibie when he was minister of research and technology, was listed as the 23rd worst debtor.

Several banks including state banks also disclosed in separate newspaper advertisements the lists of the largest borrowers with substandard and doubtful debt categories. The loan workout strategy of these debt categories is being handled by each of the banks.

The list of 164 of the worst debtors issued by state-owned Bank BNI included business units of the Texmaco Group and PT Astra International.

Another state-run bank, Bank BRI, issued its 193 worst debtors, and nationalized Bank BCA also listed its top 21 debtors. Other smaller banks also released their lists of debtors.

Bambang said that the publication of the list of the worst debtors as well as the other groups of debtors were meant to show the seriousness of the government to get tougher on the recalcitrant debtors in recovering loans.

He denied allegations that the government was moving slow in recovering the nonperforming loans and had acquiesced to pressures from well-connected businessmen.

He pointed out that the government had been preoccupied in the past year with preparations for the massive bank restructuring programs.

Bambang said that the recovery of nonperforming loans as well as the other type of loans were vital to minimize the cost of the government bank recapitalization program.

He added that loan recovery or restructuring would improve the performance of banks and lessen recapitalization costs. (rei/rid/cst)