Bad debtors face tougher measures

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)