Creditors 'keen to renegotiate debts'

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)