Govt to make new bankruptcy law
JAKARTA (JP): President Soeharto ordered Minister of Justice Muladi yesterday to quickly prepare bankruptcy and antimonopoly bills to improve the legal infrastructure for businesses in the country.
The President said the government would issue a regulation (Perpu) next month as an alternative bankruptcy law before enacting a new law due to the urgent need for the government to address the issue.
"The issuance of a Perpu is allowed by the 1945 Constitution... but consultations must first take place with the House of Representatives," Muladi said after meeting with Soeharto at his private residence on Jl. Cendana, Central Jakarta.
Indonesia's bankruptcy code has been considered opaque and irrelevant to the modern business world, it being based on the 1905 insolvency ordinance enacted by the Dutch.
Radius Prawiro, chairman of the Corporate Foreign Debt Settlement Team, said recently a new bankruptcy code would expedite the liquidation of insolvent companies in light of resolving the private sector's US$73.96 billion offshore debts.
"The rights of creditors and debtors are mutually protected (by effective bankruptcy laws)," Muladi said.
Analysts noted that the country's economic turmoil had forced many companies into technical bankruptcy but that the present procedures for declaring them legally bankrupt were so arduous that the parties involved had hesitated to utilize the legal process.
Foreign creditors lining up to foreclose on the assets of their debtors to recoup loans have complained over the antiquated and badly written bankruptcy procedures that make it nearly impossible for them to take legal action.
"Debtors who have goodwill must also be protected. So I wish to emphasize the protection of the two parties," said Muladi.
Senior economist Sri Mulyani Indrawati recently said an adequate legal infrastructure and a transparent government would be vital in helping to solve the economic crisis.
"The International Monetary Fund must have also inspired us to act quickly on the two laws. We must be honest and do not need to hide it. But it is in our national interest to adopt an antimonopoly law to ensure fair market competition," Muladi said in reply to a question asking the reason behind the speedy move on the new laws.
The President also called on Muladi to address allegations made by Indonesian lawyers Tuesday that foreign lawyers have been working here illegally.
The President said the presence of foreign lawyers here was unavoidable, especially with regard to World Trade Organization rules on trade and services.
However, the President said the government had not lifted the law restricting foreign lawyers working in the country.
"As long as we have not liberalized our service industry, including legal services, foreign lawyers cannot make legal presentations here," Muladi pointed out. (prb)