Govt forms new unit to speed up debt restructuring

JAKARTA (JP): The government announced on Tuesday the establishment of a new unit called the one-stop facilitation group designed to help accelerate the process of restructuring private sector debt.

The chairman of the Jakarta Initiative Task Force, Jusuf Anwar, said the one-stop facilitation services to be provided by the interministerial unit were expected to alleviate various administrative and regulatory obstacles posed by the bureaucracy in restructuring corporate debt.

"The main objective of the one-stop facilitation group is to help solve administrative and regulatory impediments to corporate restructuring," he said on the sidelines of a debate on the new central bank bill by the House of Representatives Commission VIII for finance and state budget.

The country's private sector is saddled with some US$80 billion in overseas debt and more than Rp 600 trillion in domestic debt. The sharp depreciation of the rupiah against the U.S. dollar and the country's economic crisis have prevented most companies from repaying their debt.

The government hopes to restructure the debt through debt reduction measures and debt-to-equity deals to prevent massive layoffs and preserve the country's assets.

The Jakarta Initiative Task Force was established last year to encourage debtors and creditors to opt for out-of-court debt settlements rather than going to commercial courts for bankruptcy proceedings.

Jusuf said the one-stop facilitation group would complement the Jakarta Initiative Task Force, adding the group's members would include senior officials from various ministries, the central bank, the Indonesian Bank Restructuring Agency and the Indonesian Debt Restructuring Agency.

He stressed the new unit would only serve as a mediator and facilitator in the debtor-creditor negotiation process.

Coordinating Minister for Economy, Finance and Industry Ginandjar Kartasasmita said in a statement the ongoing bank restructuring process only would be effective in driving the country's economic recovery if implemented together with the recovery of the real sector through corporate restructuring.

"This will get the commercial sector going again and at the same time directly revive the employment sector," he said.

Finance minister Bambang Subianto hoped negotiations between debtors and local and foreign lenders would result in timely private sector debt restructuring.

The government recently launched major bank restructuring measures in a bid to clean up the banking industry, which is a key factor in the country's economic recovery.

However, an effective solution to the country's private sector debt overhang also is critical for economic recovery, particularly in allowing foreign lenders to resume making loans to the real sector.

Jusuf said the Jakarta Initiative Task Force was currently assisting in the restructuring of at least 143 companies, including state-owned enterprises with total outstanding loans of $18.41 billion in foreign exchange debt and Rp 8.69 trillion in local debt.

"No less than 15 of these companies, with outstanding loans totaling $1.75 billion and Rp 354 billion, have reached an agreement with their creditors."

"These companies have bad debts ranging from less than Rp 30 million to over $1.2 billion," he added. (rei)