Bambang threatens stubborn debtors

Bambang threatens stubborn debtors

JAKARTA (JP): Minister of Finance Bambang Sudibyo warned
indebted businesspeople on Thursday to cooperate in settling
their debts to domestic banks or risk the seizure of their assets
and legal prosecution.

The minister said the government would begin taking legal
action against recalcitrant debtors next month.

"We will seize the assets of uncooperative debtors and
prosecute these people. This is already a firm decision," he told
House of Representatives Commission IX on the state budget and
finance during a hearing.

He said that both Coordinating Minister for Economy, Finance
and Industry Kwik Kian Gie and Attorney General Marzuki Darusman
had agreed to such measures.

Bambang said the Indonesian Bank Restructuring Agency (IBRA)
had so far identified four businesspeople who continued to be
uncooperative in settling their debts, including timber tycoon
Mohamad "Bob" Hasan, the long-time golfing partner of former
president Soeharto.

He said the government also had decided to provide incentives,
including tax breaks, to those debtors who cooperated in settling
their debts.

Bambang rejected the demand by a number of legislators that
the government reduce the principal of the debts to accelerate
the debt restructuring process.

"We should not be hasty in providing debt forgiveness," he
said.

Golkar Party legislator Paskah Suzetta insisted the government
should provide debtors with relief, saying the government had
bailed out the country's banks by financing up to 80 percent of
the bank recapitalization costs.

He said the indebted companies were being treated unfairly by
the government.

But Bambang dismissed the idea that the government was bailing
out the bankers, pointing out that former bank owners had been
forced to surrender their assets to repay the full value of their
debts to the government.

IBRA manages approximately Rp 220 trillion in nonperforming
loans (NPLs) transferred from banks which were closed,
nationalized or recapitalized.

The agency is currently prioritizing the restructuring of some
Rp 84 trillion worth of NPLs owed by 21 business groups, mostly
owned by influential businesspeople.

In addition to the NPLs under IBRA's management, banks also
are struggling to restructure the NPLs under their own
management.

Many people have expressed concern over the slow pace of
restructuring these NPLs. Experts have said restructuring the
NPLs was key to the resumption of bank lending to the real
sector, and the recovery of the country's crisis-hit economy.

Bank Indonesia recently relaxed a number of regulations to
accelerate the debt restructuring process.

Deficit

At the hearing, Bambang also said his office expected the
budget deficit in 2001 to be approximately 3.7 percent of gross
domestic product (GDP), compared to 4.8 percent this year.

He said domestic revenue, particularly from taxes, must be
increased and spending cut to achieve this lower deficit.

"The government will try to reduce the deficit because we want
to reduce our dependence on foreign loans," Bambang said.

Indonesia's sovereign loans total some US$75 billion. Several
multilateral and bilateral organizations have provided the loans,
including the World Bank, the Asian Development Bank, the
International Monetary Fund and the Consultative Group on
Indonesia.

There have been increasing calls for the government to reduce
foreign borrowing, including following the lead of Thailand and
ending its participation in the IMF-led economic bailout program.

The IMF has promised the current administration some $5
billion in loans to help finance the country's three-year
economic reform program. The fund so far has disbursed more than
$700 million.

The state budget is currently under pressure, particularly due
to the huge cost of the country's bank restructuring and
recapitalization program.

Bambang also told legislators his office was drafting a new
law to boost the independence and effectiveness of the country's
capital market supervisory agency, Bapepam. He said the law would
include stronger sanctions for violations of capital market
regulations.

Bambang said his office would soon seek the green light from
the President to proceed with the drafting of the law, adding
that the draft was expected to be submitted to the legislature by
November. (rei)