Jakarta Initiative seeking $2.5b to help restructuring
Jakarta Initiative seeking $2.5b to help restructuring
JAKARTA (JP): The Jakarta Initiative Task Force chairman Jusuf
Anwar said on Monday that he was inviting multi-national
companies (MNCs) to provide at least US$2.5 billion to be used as
working capital for indebted local companies.
He said on Monday that talks had started with three MNCs which
had shown an interest in providing interim funding for viable
indebted companies.
"This is among the carrots we're planning to dangle in front
of companies willing to undertake restructuring programs under
the auspices of the Jakarta Initiative," he told reporters after
speaking at the annual conference of the Indonesian Real Estate
Developers Association.
The Jakarta Initiative Task Force was launched last month to
provide facilities designed to encourage debtors and creditors to
come to the negotiation table to reach out-of-court debt
settlements through a process of restructuring.
The sharp depreciation of the rupiah against the U.S. dollar
has left most local companies unable to repay their overseas
debts, which together amount to more than $63 billion. Local
debts, which total more than Rp 600 trillion, have been similarly
affected.
The government has encouraged debtors and creditors to reach
out-of-court debt settlements to save large numbers of indebted
companies from liquidation resulting in widespread job losses.
Jusuf said that the government was also considering offering
tax neutrality to companies engaged in a restructuring process.
He explained that Bank Indonesia, the central bank, issued a
new ruling on bank loan restructuring on Nov. 12. The ruling
contains seven points of guidance for local banks to follow when
restructuring their customers' debts.
"These will help to guide banks daring enough to enter
restructuring deals. They should also help to appease bankers'
fears that they will be accused of KKN if they offer to forgive
or restructure debts owed to them," he said.
KKN is the local acronym for corruption, collusion and
nepotism.
Under Bank Indonesia guidance, local banks can provide debtors
with a variety of restructuring measures including debt
reduction, extension of maturity and lowering of interest rates.
Jusuf urged both debtors and creditors to begin negotiating
restructuring deals, stressing that the government would not bail
them out off their current difficulties.
"We're providing carrots now, but when the time comes we'll
also be waving the sticks," he said.
He added that more than 50 companies with combined debts of
over $8 billion had asked the Jakarta Initiative to assist in
initiating corporate restructuring programs.
Earlier this month, the government announced that only 25
companies with combined debts of $5 billion had asked the Jakarta
Initiative for assistance.
"The number is growing. I'm sure more companies will come to
us soon," Jusuf said. (rei)