JITF ends mandate, completes most tasks

JITF ends mandate, completes most tasks

Dadan Wijaksana, The Jakarta Post, Jakarta

The government, without much fanfare, dissolved on Thursday
the Jakarta Initiative Task Force (JITF) after it completed a
fairly successful five-year mandate of restructuring most of the
private sector's huge debts as it had been asked to do.

Having handed over a total of 102 cases worth of US$26.9
billion in debts, JITF managed to restructure 96 cases worth
$20.5 billion, or close to 80 percent of the total value, JITF
Chairman Bacelius Ruru told reporters.

"Most of the debts were dealt with in the form of
rescheduling. But there are other ways, which are also popular:
debt-to-equity swaps, debt-to-asset swaps and buybacks," Bacelius
said.

While rescheduling extends the date of maturity,
a buyback scheme allows debtors to purchase back their debts at
discounted prices.

JITF was a state-funded agency which, similar to the
Indonesian Bank Restructuring Agency (IBRA), was tasked to help
clean up the mess resulting from the financial crisis in late
1990s, as many loans had turned bad following the rupiah's
massive depreciation.

While JITF is focused on tackling debts owed by the private
sector, IBRA was assigned to tackle bad loans from the banking
sector that have become non-performing.

Upon the request of the International Monetary Fund (IMF), the
World Bank and the United States Agency for International
Development (USAID), the agency was established in 1998 with its
main task being to restructure huge dollar-denominated debts owed
by the private sectors to creditors, mostly foreign banks. A
successful debt restructuring would allow companies to seek new
loans to strengthen their capital, or to use as working capital.

Although there are many companies that had sought to settle
their debts with creditors by themselves, hundreds of companies
turned to the JITF for help.

At the start of the crisis, Indonesia's companies owed an
estimate of $120 billion to both domestic and foreign creditors,
of which $60 billion was said to be in a "distressed condition".

The agency was initially set to close in 2002, but its mandate
was extended by the government for another year because there
were still a lot of debts in the corporate sector yet to be
restructured. Furthermore, the agency had been performing
efficiently.

Coordinating Minister for Economic Affairs Dorodjatun
Kuntjoro-Jakti hailed the closure of the agency, saying it should
show signs that the country's economic recovery was on the right
track.

"I'm pleased about this, especially as we're also about to
witness the closure of IBRA which is also an agency inherited
from the crisis," Dorodjatun said.

IBRA is slated for termination by the end of February.

With the JITF mandate having expired, many of its members have
now joined the National Mediation Center, a newly established
agency with the purpose of facilitating and mediating commercial
disputes between debtors and creditors, he added.

JITF, supervised by the Financial Sector Policy Committee -- a
powerful grouping which consists of senior economic ministers --
was staffed by a multinational team of local and expatriate
professionals and support staff.

Samuel Tobing, JITF Chief Operating Officer, said that most
Indonesian corporations have successfully lessened their debts by
as much as 50 percent, making them well capitalized to meet the
next phase of economic expansion.