Businesses urge WB to help ease debt problem

Businesses urge WB to help ease debt problem

JAKARTA (JP): Indonesian business leaders have urged the World
Bank to take a more active role in helping the country's ailing
private sector through its affiliated International Finance
Corporation (IFC).

Teddy P. Rahmat, president of the diversified Astra
International company, said here yesterday the World Bank,
through its affiliated IFC, should do more to help ease the
country's private-debt crisis.

"We expect the IFC to be more aggressive in entering into the
private sector," he said following a meeting of more than 30
Indonesian business leaders with World Bank President James
Wolfenhson yesterday.

Teddy explained that both the World Bank and the Indonesian
government could not directly bail out the country's huge private
sector overseas debts. "But the IFC can. We think they have to be
more active," he said.

The business leaders said there was an indication the World
Bank would help to push IFC to be more active.

"But we have to work hard on our homework," Teddy said.

He said the government's IMF-sponsored economic reforms were
already on the right tract. "We only need to implement them
consistently," he said.

IFC is an affiliate of the World Bank which helps private
enterprises in developing nations by mobilizing domestic and
foreign capital, including its own.

As of October 1997, its loan commitments to Indonesian
companies totaled US$1.4 billion.

Indonesia's corporate short-term foreign debts are believed to
total $66 billion, a major factor in the sharp fall of the rupiah
which has lost over 75 percent of its value since July last year.
Solving the debt problem is seen as a critical point to revive
the country's economy from its current severe crisis.

Wolfensohn met with the Indonesian business leaders to get
first-hand information about the current crisis.

The meeting, which was closed to the media, followed his
morning gathering with Indonesian non-governmental organization
leaders and influential public figures.

Later in the afternoon, he had lunch with key government
officials, including Minister of Trade and Industry Tunky
Ariwibowo, Minister of Finance Mar'ie Muhammad and Coordinating
Minister for Economy and Finance Saleh Afiff.

Wolfensohn, who arrived in Jakarta Tuesday, also visited
several slum areas in the capital. He is expected to leave the
capital today to visit the Philippines and South Korea.

He previously visited Thailand, Singapore and Malaysia before
coming to Indonesia on his regional tour.

"We expect the World Bank to echo the positive measures we've
taken," said Irianto Ongko, chairman of the Ongko Group, pointing
out that the World Bank could assure Indonesia's economic reforms
and political system.

"The private sector expects the World Bank to believe that the
country can recover from its current economic crisis in one to
two years," said James T. Riady, vice chairman of the diversified
Lippo Group.

He expected the crisis to bottom out within the next 12
months. "But the financial sector usually recovers eight months
before the real sector," he said.

He believed the economy may rebound as soon as the end of
March with foreign investors starting to reenter the country.

"The only major problem right now is regarding political
uncertainty," he said.

The country will hold an election for the president and vice
president in March.

Although the World Bank in principle does not intervene in
private-debt situations, the business leaders hoped the
international institution would play a mediator role between
local debtors and foreign creditors.

"We need assistance in negotiating with lenders," said
Aburizal Bakrie, head of the Indonesian Chamber of Commerce.

He said the business leaders also urged for greater efforts to
reduce the rupiah's volatility through the establishment of a
"currency board". He did not elaborate further.

The rupiah's volatility has been the main focus in the current
economic crisis.

One of Wolfensohn's major questions in yesterday's meeting
regarded the sharp drop of the rupiah last month, when other
crisis-hit regional currencies like the baht seemed to have
already stabilized.

The rupiah hit a historic low last month when it closed at Rp
17,000 against the U.S. dollar in the Singapore currency market
due to fears of the private debt problem and political
uncertainty.

The Indonesian currency gained ground yesterday to close at
8,700, gaining from the previous day's closing at 9,900. The
currency was helped by reports that Singapore Prime Minister Goh
Chok Tong had proposed to help Indonesia finance its imports.

Indonesia announced a freeze on servicing the country's
corporate foreign corporate debt last month to allow debtors to
negotiate new deals with their creditors. (08/das).