Govt warned against annulling debt deals

Govt warned against annulling debt deals

JAKARTA (JP): President Abdurrahman Wahid's economic advisors
warned the government on Tuesday against arbitrarily annulling
the debt-settlement agreements already concluded by indebted
bankers and the Indonesian Bank Restructuring Agency (IBRA) in
late 1998.

Sofyan Wanandi, Chairman of the National Business Development
Council, and Sri Mulyani Indrawati, secretary of the National
Economic Council, cautioned that the government should have a
strong legal basis for changing the debt-settlement deals.

"Whatever the government does should be entirely within proper
legal guidelines to ensure validity," Sofyan told reporters in
commenting on Coordinating Minister for Economy, Finance and
Industry Kwik Kian Gie's remarks on Monday.

Kwik said the government was reviewing the Master of
Settlement and Acquisition Agreement (MSAA) between several
former bank owners and IBRA whereby the debtors surrendered their
assets to repay their debts to the government.

Among the major indebted bankers signing the agreements were
the Salim group, Mohammad 'Bob' Hasan, Usman Admadjaja, Syamsul
Nursalim and Ibrahim Risyad.

Kwik argued that if the MSAAs were not canceled or reviewed,
they would incur huge losses for the government and taxpayers as
the value of the ceded assets turned out to be far below the
outstanding indebtedness.

Sofyan, however, argued that the MSAAs were concluded after
vigorous negotiations where both the debtors and government were
assisted by the country's best lawyers and the agreements were
endorsed by the International Monetary Fund.

"If the government can easily change or cancel any agreement
long after it was signed, where then is our legal certainty," he
added.

He argued that asset values could fluctuate sharply or fall
steeply, especially amid the economic crisis the country is
facing, but this by itself cannot be a legitimate reason for
canceling a legitimate agreement.

"Businesspeople badly need law certainty and stable conditions
in order to fuel economic recovery," Sofyan said, adding that any
controversial plan as cited by Kwik could further dampen investor
interest.

Sri Mulyani said there was still room for renegotiation
between the government and the debtors to iron out the best
solution to the problem.

"As long as both sides renegotiate in good faith, the
difference of views regarding the debt-settlement agreements
could still be worked out," she added.(vin)