Conference on debt begins

JAKARTA (JP): Approximately 1,200 participants representing mostly local debtors and foreign creditors attended the Jakarta Initiative conference, which opened on Monday to restart stalled negotiations on massive corporate debts.

Coordinating Minister for Economy, Finance and Industry Ginandjar Kartasasmita, who opened the two-day gathering, reaffirmed the importance of the corporate debt restructuring for the recovery of the crisis-hit economy.

"We will not be able to generate the jobs we need, alleviate poverty, expand our national output or generate fiscal balance until the engine of growth in our economy, its private sector, is working again. This means that the companies which employ our people, provide our exports and invest for our future have to be put on a sound long-term financial footing," he said.

He said that proper and accurate information must be shared between debtors and creditors to reach a restructuring agreement.

"When they work with asymmetric information, it can undermine the trust that is needed for agreements to be reached," he added.

Finance Minister Bambang Subianto also stressed in his speech the need for transparency on the part of local debtors.

He said the government had abolished regulatory hurdles and provided incentives to promote corporate restructuring.

The Jakarta Initiative corporate restructuring program was launched last month to encourage debtors and creditors to meet at the negotiation table to hammer out an out-of-court debt settlement.

The country's private sector overseas debt as of April this year amounted to US$67 billion, including $4 billion in the form of securities and derivatives. Of the total, $32 billion is due this year.

The Jakarta Initiative also promotes an out-of-court settlement for the more than Rp 600 trillion in debts owed by the corporate sector to domestic commercial banks.

The Jakarta Initiative Task Force chairman, Jusuf Anwar, said the large participation in the conference indicated a positive attitude both on the part of the creditors and debtors to solve the debt problem through corporate restructuring.

He said the number of participants was three times more than the original target.

He said 35 percent of the conference participants represented foreign creditors, 35 percent represented local debtors and the remainder represented local bankers, lawyers, auditors, restructuring consultants and government officials.

However, head of the World Bank's corporate restructuring and governance group, Gerald Meyerman, warned people not to expect too much too soon from the conference.

"Everyone needs to recognize that this is a very complex process. The Jakarta Initiative conference represents an important first step but it's unrealistic to expect large-scale results on restructuring until the first quarter of 1999," he said.

But he added, "With so many participants registered, it is very clear that all of us have made an impressive start."

Conference speakers included chairman of the country's private debt team, Radius Prawiro; World Bank country director in Jakarta, Dennis de Tray; the Lippo Group's deputy chairman, James Riady; the Indonesian Chamber of Commerce chairman, Aburizal Bakrie; the National Private Banks Association chairman, Gunarni Soeworo; John Knight of Chase Manhattan Bank; Wolfgang Topp of Deutsche Bank; Nitin Bajtai of Morgan Stanley Dean Witter; and Victor Khoslal of Cerberus Capital Management.

The second-day meeting on Tuesday will discuss, in closed-door sessions, sectoral developments and will hopefully see early starts in individual talks between debtors and creditors. (rei)