Firms told not to rely much on govt's help

JAKARTA (JP): The private sector should not rely much on the government's help in coping with their mounting offshore debts, a former senior minister said here yesterday.

Radius Prawiro, recently assigned by President Soeharto to head a task force to assist the private sector in negotiating with creditors, said Indonesian companies should not expect protection or a bailout from the government.

Private companies should, instead, take restructuring measures to show creditors they had a strong commitment to handle their debts, he said.

Business reforms which would allow them to reduce imports and expand exports and limit their investment expansion, especially in sectors needing foreign exchange reserves, was much needed to enable them to ride out the crisis, said Radius, former minister of finance from 1983 to 1988 and coordinating minister for economy and finance from 1988 to 1993.

"I call on entrepreneurs, if they want to be strong, not to dream of getting subsidies, protection, special treatment or facilities from the government, similar to what they had received in the past," Radius said after meeting with Soeharto at his residence on Jl. Cendana, Central Jakarta.

The task force, appointed by Soeharto last week, includes Radius, the chief executive officer of the Salim Group, Anthony Salim, the chairman of the Argo Manunggal Group, The Nin King, and the chief of the Gobel electronics group, Rachmat Gobel.

"What is important is that we have strong goodwill to resolve our problems (debts) and our foreign creditors must also know it. We must be transparent to them, we must show them everything they want to see (from the companies)," said Radius.

"The government will help the private sector in dealing with the foreign debt. We'll try to find a way we can help it. However, a final solution will heavily depend on the private sector itself," Radius said.

Radius also quoted Soeharto as criticizing what he called inaccurate reports of the country's foreign debt which could damage government efforts to resolve its ailing economy.

Citing an Indosuez report which put Indonesia's foreign debt at US$200 billion, the President said such irresponsible reports could severely worsen the country's credibility in the international market.

The country's foreign debt was $118 billion as of September, including $65.6 billion owed by 220 private companies, Radius said.

If commercial papers held by foreigners were included, the amount would increase by another $15.3 billion, he added.

"Based on a joint survey with the International Monetary Fund, our offshore debt is $15.3 billion in the form of commercial papers, convertible bonds and promissory notes," he said.

Radius, also former governor of the central bank from 1966 to 1973 and minister of trade from 1973 to 1983, revealed that his team would initially assist about 50 private companies.

"I will help the companies resolve their debts. This mission is related to the government and the Monetary Council because if they do not repay their debts, the companies will continue to receive lower ratings from Standard & Poor's, for instance, which would also affect Indonesia's rating," Radius said when asked about his team's relationship with the Monetary Council.

When asked how long his team would work, Radius answered jokingly: "If you ask my wife, she'll answer, 'As soon as possible.'" (prb)