Corporate foreign debt 'manageable', says minister

Corporate foreign debt 'manageable', says minister

JAKARTA (JP): Coordinating Minister for the Economy Rizal
Ramli said on Friday that the country's corporate overseas debt
maturing in 2001 would not be a serious threat to the rupiah as
the debt would still be "manageable."

Rizal pointed out that the success of the Jakarta Initiative
Task Force (JITF) last year in helping restructure between US$8
billion and $10 billion in corporate foreign debt has eased the
debt burden.

"I think it (the debt level) will be much more manageable," he
told reporters following a meeting with legislators.

Bank Indonesia has said that some $16.6 billion in corporate
overseas debt would mature in 2001.

The central bank said that another $2.3 billion owed by the
banking sector to foreign creditors would also mature in the same
year.

Rizal said JITF was expected to help restructure more foreign
debt.

He did not mention JITF's new target, but according to the
previous government letter of intent with the International
Monetary Fund, the task force is expected to help restructure a
total of $12 billion in corporate debt by April 2001.

The rupiah had been under strong pressure last year due to a
combination of domestic political instability and external
factors.

But experts also said that many corporations had purchased
U.S.dollars to repay their foreign debt.

The rupiah dropped to as low as 9,700 per U.S. dollar late
last year, which was more than 27 percent lower than the level in
early last year.

The average exchange rate last year was Rp 8,400 per U.S.
dollar. The government's exchange rate target is Rp 7,000 per
U.S. dollar.

Economists have said that restructuring the country's huge
corporate foreign debt would be critical to the economic recovery
process.

The corporate sector owes a total of around $65 billion in
corporate foreign debt to foreign creditors.

In a recent report, Bank Indonesia also said that the
corporate overseas debt in 2001 would decline following progress
in its restructuring.

Bank Indonesia deputy governor Miranda Goeltom said the
maturing corporate overseas debt would not create a strong
pressure on the rupiah because much of the debt was owed to
parent companies abroad.

"The pressure on the rupiah would likely be the result of
domestic political uncertainties," she added.

Rizal also said the expected strong export performance this
year as well as the return of foreign investors to the country
should bode well for the rupiah.

He said the sale of assets controlled by the Indonesian Bank
Restructuring Agency (IBRA) would encourage foreign investors to
return.

The government is planning to sell its ownership in the
publicly listed Bank Central Asia and Bank Niaga in June this
year. This is one of the asset sales awaited for by foreign
investors.

The government is also planning to privatize around eight
companies this year to raise around Rp 6.5 trillion (US$684.21
million) in proceeds.

State-owned pharmaceutical company PT Indofarma is expected to
go into the market first through an initial public offering in
the first quarter of this year. (rei)