Indonesia amending bankruptcy law
Indonesia amending bankruptcy law
JAKARTA (JP): The government is finalizing draft amendments of
the 1998 law on bankruptcy to make it better able to accommodate
the latest developments in business and to improve the
transparency of bankruptcy proceedings, a senior official at the
justice ministry said on Thursday.
"We expect to complete the draft amendments next month," Has
Natabaya, director of the National Law Development Center, said
during the first day of a two-day international conference on
bankruptcy reform in Indonesia.
The amendments, Natabaya added, would address the concerns of
creditors, debtors and the general public over the shortcomings
of both the bankruptcy law and the Commercial Court.
The chief of the Commercial Court's steering committee,
Purwoto Gandasubrata, said at the conference that the Commercial
Court often was criticized by litigants for what they saw as
controversial decisions which frustrated creditors and damaged
investor confidence in the Indonesian legal system.
"But these shortcomings must be seen against the novelty of
the law and the short experience of the court (established last
August). Of more importance, we are learning and making
corrections along the way," Gandasubarata said.
He also said his committee had proposed the government raise
the monthly salary of the country's estimated 5,000 judges to
between Rp 5 million (about US$575) and Rp 15 million to increase
their independence.
"Salary improvements should be part of the concerted efforts
to ensure judicial independence," Gandasubrata said.
At present the monthly salary for judges ranges from Rp 1
million to Rp 2 million.
A. Zen Umar Purba, an insolvency expert at the Ministry of
Justice, said Indonesian judges earned much less than lawyers and
receivers.
The conference, which is being cosponsored by the Australian
government, the World Bank and the International Monetary Fund
(IMF), features bankruptcy experts from the United States,
Australia, Japan and several other countries. It is designed to
gather input to help improve the draft amendments to Indonesia's
bankruptcy law.
Gregory Churchill, a bankruptcy consultant to the
International Monetary Fund, said many decisions by the
Commercial Court were not supported by underlying law and were
inconsistent with general commercial practices and principles.
"It became evident that there are a number of problem areas
that must be addressed through further training, education and
opportunities for exposure to the structure of modern commercial
transactions," Churchill said.
The government actually has made some improvements to the
Commercial Court, including the appointment in February of four
respected law professors and retired judges as ad hoc judges to
the court.
However, another speaker at the conference, Daniel S. Lev of
the University of Washington, contended that the Commercial Court
would not improve unless the government was willing to undertake
a comprehensive overhaul of the judicial system.
Lev also warned of a possible nationalistic backlash against
the bankruptcy law.
David K. Linnan of the University of South Carolina shared
Lev's views, citing the argument among many Indonesian
businesspeople that effective insolvency proceedings meant
selling out national interests to foreigners.
Linnan said this argument was poisonous to legal certainty
because what the businesspeople actually wanted the court to do
was disregard the rule of law.
"Indonesia needs to decide which is more important to its
development: the rule of law or the interests of existing debtor-
equity holders," Linnan said. (02)