Govt revises SME debt restructuring plan

Govt revises SME debt restructuring plan

The Jakarta Post, Jakarta

The government said it had revised a debt restructuring plan
for small and medium enterprises (SMEs), combining debt reduction
and refinancing offers under one scheme to recoup some Rp 39
trillion (about US$3.9 billion) from small debtors.

State Minister of Cooperatives and Small and Medium
Enterprises Alimarwan Hanan said on Thursday the government
cleared the main barrier for a debt restructuring scheme for
SMEs, with its decision to combine two approaches.

"The SMEs debt restructuring policy is still on, but it will
be packaged with a refinancing scheme," he announced after
meeting Vice President Hamzah Haz.

The government wants to have an SMEs debt restructuring scheme
out this month, but disagreement over the approach stalled the
process.

Under Alimarwan's original scheme, debtors were to be offered
a 50 percent discount for a one-time cash settlement, and 40
percent if they paid up within one year.

Hamzah was against the debt reduction offer, favoring instead
to reschedule the debts and if necessary refinance selected SMEs.

His concern was reportedly shared by the International
Monetary Fund (IMF), which questioned the impact of mass debt
write-offs on the state budget.

Details of the revised plan have yet to be revealed, and
whether or not it would pass as a government policy depends on
the Cabinet's approval.

The government has registered more than 414,000 small debtors,
but not all are believed to be SMEs. Debtors with individual
debts of up to Rp 5 billion fall under the government's SMEs
category, meaning that they include consumer credit loans, credit
card loans or loans owed by businesses linked to large groups.

Of the Rp 39 trillion owed by SMEs, most has been taken over
by the Indonesian Bank Restructuring Agency (IBRA), which sells
the loans at discounted prices.