Govt to go ahead with debt extension plan

Berni K. Moestafa, The Jakarta Post, Jakarta

The government said on Monday it would go ahead with its controversial plan to extend the payment period for debtors of the Indonesian Bank Restructuring Agency (IBRA), but promised tougher legal action to force them into repaying their debts.

Amid protests the debt extension plan for uncooperative debtors smacked of injustice, Coordinating Minister for the Economy, Dorodjatun Kuntjoro-Jakti said the government had decided to go ahead with it.

But he added the government would impose new legal measures on uncooperative debtors.

"We will discuss this (the legal measures) in the Cabinet meeting on 14th (of January)," Dorodjatun told reporters after a Cabinet meeting on the 2001 performance of IBRA and the Financial Sector Policy Committee (FSPC).

The FSPC is in charge of IBRA's major debt restructuring deal. Last month it approved IBRA's bid to extend the shareholders settlement program to 10 years from four.

The program applies to bankers who surrendered ownership in their banks after the government injected them with liquidity support loans during the 1997 financial crisis.

But it turned out that most of the loans were rechanneled to the banks' affiliates instead, which was a violation of the bank legal lending limit ruling.

Under the shareholder settlement program, the bankers escape legal proceedings being taken against them.

In return, the former bankers must surrender their assets to IBRA as part of repaying their debts to the government.

The transfer of their assets is made under deals such as the Master of Settlement and Acquisition Agreement (MSAA), signed in 1998 by five large conglomerates, including the Salim Group.

Other owners of smaller banks made deals under the Deed of Indebtedness Agreement (APU).

Under the original shareholders settlement program, the former bank owners must repay their debts within four years.

But so far, nearly all bankers had yet to start paying their debts or surrender their assets to IBRA. For the large MSAA debtors, the year 2002 marks the deadline.

At that point, IBRA is supposed to force them into paying by taking legal action. Threats against uncooperative debtors have been made numerous times by top government officials, including former Attorney General Marzuki Darusman, but so far with poor results.

IBRA then proposed giving the uncooperative debtors up to 10 years to repay their debts. FSPC, which groups together senior economic ministers, approved the plan.

Getting tough on the uncooperative debtors is part of a lending agreement with the International Monetary Fund (IMF).

In it, the government said it would finalize a plan to cope with the uncooperative debtors by the end of next March.

But State Minister of State Enterprises, Laksamana Sukardi said the government need not seek the IMF's approval for the 10- year extension of the shareholder settlement program.

IBRA is in charge of selling the assets it took over from debtors to recoup the cost of bailing out the banking sector.

For this year, the agency is tasked with collecting Rp 42.8 trillion in cash to be contributed to the state budget deficit.

Of that amount, IBRA's Asset Management Credit (AMC) unit must sell Rp 28.6 trillion in loan assets.

The Asset Management Investment (AMI) unit must sell Rp 8.4 trillion in fixed assets, while the Bank Restructuring Unit (BRU) Rp 4.26 trillion. IBRA plans to collect the remainder through cash and other means.