IBRA urged to help small firms put debts in order

JAKARTA (JP): The Indonesian Bank Restructuring Agency (IBRA) should pay more attention to the restructuring of debts of small and medium enterprises (SMEs), a noted businessman said on Thursday.

The chairman of the National Business Development Council, Sofyan Wanandi, said the restructuring of the enterprises' debts should be completed this year in a bid to speed up the economic recovery.

"These SMEs are important economic players as they could absorb a significant volume of employment and reduce imports by providing their products in the market," he said at a business dialog held by the Center for Strategic and International Study (CSIS).

The speakers at the seminar included deputy chairman of IBRA Mahmuddin Yasin, chairman of the Indonesian Chamber of Trade and Commerce Fadel Muhammad and a member of Commission IX on finance and development planning at the House of Representatives, Paskah Suzetta.

Sofyan, also the chairman of the Gemala Group, said after the debt restructurization was completed, the enterprises should be given an opportunity to acquire loans from commercial banks to help them start normal operations.

He said he discussed the matter with President Abdurrahman Wahid and the President agreed with the idea of speeding up the debt restructuring process for the firms.

Sofyan said that although Abdurrahman agreed the enterprises needed special attention, he said it did not mean they were exempt from having to repay their debts.

"They still have to repay the principal of their debts, only they should receive a maximum discount on the overdue interest payments and a write-off of the late payment penalty," he said, in clarifying his earlier statement of the need to write off the debts of small and medium companies.

Sofyan said that providing the interest payment discount was reasonable because like other businesses, they were burdened by high interest rates during the two years of the economic crisis.

He said completing debt restructuring of small and medium enterprises was much easier than sorting out the problems of big business, and the fact was that their existence and role exerted a greater impact on the economy.

"SMEs do not give headaches and complicated problems to IBRA. They came under IBRA management in the first place because their then bankers had problems and they were transferred to IBRA."

Sofyan was confident that of the about 170,000 SMEs currently under IBRA, at least 150,000 held a good possibility of operating again.

He believed these enterprises, each having total assets of less than Rp 50 billion, would operate as sound companies when they had completed the restructuring of their debts and received new loans to support operations on reasonable interest rate levels.

"Their business prospects or fixed assets whose value might have been partially pledged to IBRA could be used as the collateral for the new loans with commercial banks," he said.

Meanwhile, Mahmuddin Yasin said IBRA chairman Cacuk Sudariyanto was now in final talks with all related parties to devise the formulation of debt relief on the principal debts of companies under IBRA management.

"The general formula and guidelines on the principal debt relief is now in the finalization process with the FSPC (Financial Sector Policy Committee) which is chaired by (Coordinating Minister of the Economy, Industry and Trade) Kwik Kian Gie," he said.

He hoped IBRA would have the results of the meeting with the committee on Friday. (udi)