Govt to make new bankruptcy law
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)