IFC says about 20% of its loans to RI firms turn bad

IFC says about 20% of its loans to RI firms turn bad

JAKARTA (JP): The International Finance Corporation (IFC) said
here yesterday that about 20 percent of its loan and equity
investment in Indonesia had turned bad as the recipients could no
longer repay their debts.

IFC's director of its South and Southeast Asia department,
Rashad Kaldany, said another 40 percent of the total financing
was doubtful but the remaining 40 percent performed well.

Kaldany said that IFC and its cash-strapped debtors were
currently working on ways to restructure and reschedule the bad
debts.

"We have to make a very substantive debt restructuring program
with these companies," he said at a media briefing.

He said IFC's existing investment portfolio in Indonesia
reached US$971 million, comprising $485 million in loans and $486
million in equity. The loans and equity, which were mostly given
to private companies, also included those arranged through
syndications.

He said the Indonesian recipients comprised 42 companies, but
he declined to identify them. According to the agency's 1997
investment portfolio report, the Indonesian recipients included
Bakrie Kasei Pet, Indorama Synthetics, Argo Pantes and Semen
Andalas Indonesia

He said IFC, an affiliate of the World Bank, was currently
working on 10 restructuring and rescheduling projects with its
Indonesian debtors, where two projects were close to an
agreement.

"In the case of one project, the sponsors (the Indonesian
borrowers) have already approached us to discuss an orderly
liquidation of their business," he said.

He pointed out that IFC had no immediate intention of taking
legal action despite the enactment of the bankruptcy law.

"We do not have any intention at this point of time to take
any legal action yet, but if conditions deteriorate in the next
few months, we might take legal action," he said.

Kaldany said that IFC was actively seeking ways to help
Indonesian export-oriented firms settle their working capital
requirements.

He said that Indonesia, the corporation's fifth largest
exposure worldwide, remained an important country for IFC despite
the worst economic crisis Indonesia has faced in decades.

He said IFC's Indonesian debtors employed over 200,000 before
the crisis and the recovery of its clients would be crucial to
improving the country's dire economic situation.

IFC said it would invest $14 million more in an Indonesian
company, despite the country's crippling economic crisis.

In the wake of a major government announcement on banking
reform, the IFC also said it would consider taking stakes in
banks, adding that many foreign investors were also "looking
around" for opportunities.

IFC said it has seen signs that Indonesian companies are
taking steps to diversify their operations to deal with the
crisis and that parts of the economy are picking up.

"So far, it appears the bottom was hit in May," Kaldany
said. (aly)