Creditors 'keen to renegotiate debts'
JAKARTA (JP): Foreign creditors are generally prepared to restructure loans to Indonesian private sector debtors in the hope it will allow them to eventually recover some of their money, a senior government official has said.
The chairman of the Indonesian Capital Market Supervisory Agency (Bapepam), Jusuf Anwar, who oversees the government- sponsored Jakarta Initiative debt restructuring program, said that corporate debtors should enter debt renegotiation with a positive attitude because restructuring their debts was a better option than beginning bankruptcy proceedings.
"Indonesian corporate debtors should be good corporate citizens and remember their responsibilities to the state and the public as well as their shareholders," he said in a statement released on Monday by the National Development Information Office.
Jusuf, Minister of Finance Bambang Subianto, several central bank directors and other senior economics officials attended the annual International Monetary Fund and World Bank meetings in Washington last week. From there they went on to meetings with members of the international business community in New York.
Jusuf discussed the debt issue with foreign creditors during the meetings.
He said the positive reaction of creditors would be followed up on at an international conference on corporate debt restructuring to be held in Jakarta in November.
Private sector foreign debt is currently placed at US$64 billion (not including bank debts), of which $20 billion falls due this year.
The Jakarta Initiative was launched last month to provide incentives and remove regulatory obstacles to corporate debt restructuring and to encourage out of court settlement of outstanding debts.
The program was designed to complement the Indonesian Debt Restructuring Program (INDRA) launched in early August, which provides debtors with foreign currency at a pre-determined exchange rate.
For debtors and creditors to enter INDRA they must first agree to debt restructuring over an eight year period agreed to in Frankfurt in June.
Many debtors have also called on creditors to write off some part of their loans because the sharp plunge in the value of the rupiah has increased their debt burden sharply at a time when domestic demand has been curtailed by the economic crisis.
Government officials have repeatedly said that a certain amount of debt write off will be necessary and have urged both creditors and debtors into negotiations aimed at bringing this about. They believe the only other alternative, settling debts through commercial court hearings, could only take place at great loss to both parties. A court would be likely to award creditors a fraction of what they are owed while debtors would lose their entire business operations. (rei)