Govt forms new unit to speed up debt restructuring

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)