Govt expects banks to repay liquidity debts in cash

JAKARTA (JP): The government expects owners of failed and troubled banks to repay in cash at least 30 percent of their liquidity debts to the government within one year.

The Association of Young Indonesian Businessmen's chairman, Harjadi Sukamdani, quoted President B.J. Habibie as saying that the remaining 70 percent could be repaid later, or repaid with assets.

"Bapak President said they have only repaid 0.7 percent in cash. He wants at least 30 percent or 40 percent, not 0.7 percent. The rest could be rescheduled, or something," Harjadi said after meeting with Habibie.

"He actually wants it all in cash. But he is being realistic because selling assets is difficult now. It's okay to reschedule but at least 30 percent goes into the government's coffers during the first year."

Defunct and troubled banks, currently under the control of the Indonesian Bank Restructuring Agency, owe the government Rp 140 trillion (US$17.5 billion).

This is the amount the government pumped into the banks as part of its blanket guarantee to all depositors and creditors of local banks.

As liquidity supports could not be recovered accordingly, the government closed seven small and medium banks in April and three large banks -- Bank Dagang Nasional Indonesia (BDNI), Bank Umum Nasional and Modern Bank -- in August.

Also in August, the government nationalized the country's largest private banks, Bank Central Asia (BCA) and Bank Danamon, and also Bank Tiara Asia and Bank PDFCI.

Owners of those banks were given until Sept. 21 to repay the liquidity funds as well as their credits channeled to companies in the same groups. But only BCA and BDNI met the deadline, by ceding assets in more than 100 companies to the government.

But then the government changed its mind and required all banks to repay all the liquidity funds in cash.

The government then required owners of all failed and nationalized banks to present concrete programs by Oct. 31 to repay their debts in cash within one year.

Last week, Finance Minister Bambang Subianto hinted that the government might change the scheme again of how to recover the liquidity funds. (prb/rid)