Sat, 13 Nov 1999

Forum angered by debt restructuring

JAKARTA (JP): The Communication Forum of Borrowers complained on Friday over the slowness of the debt restructuring program executed by the Indonesian Bank Restructuring Agency (IBRA).

Forum chairman BK. Hadisoebroto said the borrowers were disadvantaged because the agency was not promoting a beneficial debt restructuring process.

"It is a shame that only 63 companies of 1,600 under IBRA have joined the agency's restructuring program," he said.

The forum currently comprises 96 corporate borrowers which owe a total of about Rp 30 trillion to IBRA.

They are part of the group of companies whose nonperforming debts were transferred to IBRA as part of the government- sponsored bank restructuring program. The agency has so far taken over about Rp 230 trillion in bad debts from closed, nationalized and state banks.

Hadisoebroto accused IBRA of failing to create a fair process in the restructuring of the borrowers' debts. He said the agency only allowed limited involvement of the borrower in the preparation of the business plan to be used as the basis of a debt restructuring program.

"What should be done is that we prepare our own business plan based on a self-assessment, which would then be properly evaluated and agreed upon by IBRA if everything in the business plan generally fits normal requirements."

He said differences in appraising the business plans often resulted in a delay in debt restructuring talks.

"And many of the borrowers did not even have a chance to go through the above process, but instead were forced to close down operations because of IBRA's mistreatment."

He said the borrowers lost all hope of restructuring their debts when the names of their companies were published in the media and labeled "problem" borrowers.

"Many of us have been unable to continue our businesses since then. We lost relationships with all our banks that were helping us finance our exports."

Hadisoebroto said the announcement hit the companies when they were at their most vulnerable.

"How can we start debt restructuring negotiations under such conditions?"

Many of the borrowers are in the real sector, he added.

"It is tied up with the fact that most IBRA officials lack the knowledge, experience and skill of the real sector business."

He said borrowers experienced difficulty in setting up meetings with IBRA officials.

He claimed that letters requesting a meeting were sent to IBRA's office on at least three occasions, but there was no response.

The forum said it would report its complaints to the House of Representatives and the International Review Committee, IBRA's supervisory board.

IBRA's public relations officer Franklin Richard said the borrowers were exaggerating their grievances.

"Their claims are simply out of proportion," Franklin told The Jakarta Post.

He said every borrower's problems were unique, necessitating individual debt plans.

"It is impossible to generalize about the problems of all the borrowers."

IBRA's team also must trace and compile data on each borrower's creditors, and data compilation process could be lengthy due to the different creditors.

Franklin said the fact that IBRA completed debt restructuring of 63 companies in a relatively short time was an achievement.

He said the document transfer of all the 1,600 borrowers to IBRA was only completed in July.

"From July, we have had less than a year. Take for comparison PT Astra International, which completed a debt restructuring deal in 18 months' time," he said of the major automaker.

Franklin also said IBRA retained continual consultation with about 40 financial consultants, who possessed a wide range of real sector business expertise, in negotiating debt restructuring with the borrowers. (udi)