ITB seeks solution to corporate debts

JAKARTA (JP): The 34,000-strong alumni association of the Bandung Institute of Technology (ITB) called on the government yesterday to set up a team to resolve the corporate debt problem.

The association's spokesman, Amir Sambodo, told a hearing with members of the House of Representative's Commission V that the team for the Supervision and Resolution of Problem Debt would help resolve defaulted corporate debts and supervise the restructuring of corporations unable to pay offshore debts.

"The market still reacts negatively to the rupiah because the government has not yet issued any definite policy to settle private debts," he said.

The government has set up a special economic and monetary council to oversee the nation's intended reforms. It is chaired by President Soeharto.

But the intended reforms have not impressed the market as the value of the rupiah continues to slide against the U.S. dollar.

"According to my friends at security companies, the market isn't sure if our government, private companies and our people are concerned about corporate debt and are willing to settle the matter," Amir said.

The country's external debt stood at about US$140 billion at the end of last year, or about two-thirds of the gross domestic product. About $30 billion was estimated to mature by March.

About $65 billion of the debt lies in corporate hands and the rest with the government.

Amir said the team should involve the government, representatives of the Indonesian Chamber of Commerce and Industry and experts.

He said corporations with defaulted debts amounting to more than the value of their assets and facing liquidation could ask for restructurization after consulting creditors.

The team can supervise the restructuring in agreement with creditors who are not affiliated with the corporation.

He said the team could use a foreign financial consultant or securities company to represent the creditors and nation's interest to search for buyers of up to 51 percent of the shares issued or transferred in the restructuring process.

Foreign buyers would be prioritized, and the rest of the shares would be allocated to social, religious and national bodies, including the workers cooperatives. (09)