Builders association seeks debt relief from local banks

Builders association seeks debt relief from local banks

JAKARTA (JP): The Indonesian Builders Association (GAPENSI)
urged the government yesterday to allow its members to reschedule
their debts with local banks because nearly all 41,750 members
are technically bankrupt.

Association chairman Agus G. Kartasasmita said his members
were no longer able repay their debts as many of their
construction projects had been delayed by the government or had
been halted by skyrocketing prices.

The increase of annual lending rates to up to 56 percent had
exacerbated the situation, said Agus.

About five million construction workers had lost their jobs
due to the crisis, he noted.

"All of us have become bankrupt, especially if based on the
new bankruptcy law," Agus said after meeting President B.J.
Habibie at the Bina Graha presidential office along with other
association executives.

As most of the member companies depend on government projects,
Agus hoped that the government would allow them to delay payment
of their debts.

"The President raised the possibility of setting up a Private
Companies Resettlement Agency (to resolve the debt problem),"
Agus noted.

Agus refused to disclose his members' total debts. He only
said 85 percent of the association members were small companies,
9 percent medium-sized companies and the rest large companies.

According to government regulations, only big companies have
the right to carry out projects worth more than Rp 1 billion
(US$650,000).

"Actually the Rp 1 billion value is no longer too big for
contractors in the regions... Therefore we call on the
government to allocate projects worth less than Rp 3 billion to
local contractors," Agus noted.

During the meeting, Agus also warned Habibie about the
possibility that some local companies would offer very low prices
to win government projects even though they realized it was not
feasible to do so.

"They do it for survival reasons although they realize the
price is too low and will cause problems for themselves," Agus
said. (prb)