House unanimously approves new bankruptcy bill

JAKARTA (JP): The House of Representatives approved yesterday a new bankruptcy bill in a move the government hopes will attract foreign investors to the country.

The House unanimously passed the bill in a plenary session attended by Minister of Justice Muladi. The bill will now be sent to President B.J. Habibie for final approval before its scheduled enactment on Aug. 20.

"The bill includes (provisions for) the handling of bankruptcy cases within a fixed and short period of time and it will provide a strong legal basis particularly for the handling of the debt problems following the monetary crisis," Muladi said.

He said the government had trained 45 judges to handle cases in a specially created commercial court once the law takes effect.

The bill, which was ratified as a Government Decree in Lieu of Law issued in April, replaces an antiquated law dating back to 1905.

The legislation was drafted hurriedly in the midst of the economic crisis as there was a pressing need for such a law given the numerous bankruptcies and massive dismissals of workers hitting numerous companies across the country.

It will give legal basis for investors to dissolve their companies.

Muladi said the first commercial court would be opened in Jakarta while several others -- in Surabaya, East Java; Ujungpandang, South Sulawesi; and Medan, North Sumatra -- would follow soon afterward.

He said that the law's existence was expected to bolster investor confidence in the Indonesian economy "so that our economy can grow robustly in the future".

Yesterday's ratified bill is expected to be eventually replaced by a more permanent and comprehensive law, as the current legislation was drafted against the backdrop of the economic crisis.

The government is expected to begin preparing the comprehensive draft law one year after the date of the current legislation's enactment.

Muladi pledged the government's willingness to cooperate and consider public inputs and suggestions when preparing the more comprehensive insolvency law.

The Golkar faction, in its address to the session, stressed several points it said should be taken into account in the future law.

Ridwan Sani, who delivered Golkar's outlook in the meeting, said that a company which borrowed from two creditors and could not pay back its debt one year after the agreed schedule should be called bankrupt.

He said that the commercial court should also announce a verdict within 30 days after an insolvency lawsuit is filed. (rms)