JITF meets debt restructuring target

JITF meets debt restructuring target

Dadan Wijaksana, The Jakarta Post, Jakarta

The Jakarta Initiative Task Force (JITF) said on Friday it had
mediated some US$18.9 billion worth of debt restructuring deals
since it was set up four years ago, out of the total $29 billion
in corporate debts that it had been tasked to help restructure.

JITF chairman Bacellius Ruru told reporters that the amount
included about $4.7 billion in debts that had been restructured
this year alone.

"By this, we've exceeded the $18 billion target set out in the
LoI (letter of intent)," Bacellius said as reported by detik.com,
referring to the economic reform program designed jointly by the
government and the International Monetary Fund (IMF).

Established in 1998 at the IMF's request, the agency was
tasked with restructuring and reducing the huge debts owed by the
private sector, which had been hard hit by the 1997 financial
crisis.

The JITF's role is to mediate debt settlements as between
debtors and creditors, mostly foreigners. Dozens of companies
with U.S. dollar denominated debts turned to the agency after the
rupiah plunged in value against the dollar.

A successful restructuring would allow companies to seek new
loans for working capital.

Bacellius said that the agency was facilitating debt talks
involving a total of 126 companies, with 53 of them being
publicly listed on the Jakarta Stock Exchange.

Now that the JITF's mandate will expire by the end of 2003,
the agency has a year left to restructure the remaining $10
billion in troubled debts.

Bacellius made clear that for debts to be restructured next
year, companies would no longer enjoy tax discount facilities as
the current incentive program was only valid until the end of
this year.

Previously, the JITF had been offering a 30 percent tax
discount facility on debt reduction deals. Based on the tax law,
any reduction in debts will be considered as income for the
debtor and be subject to income tax.

The JITF is not the only restructuring medium as the
Indonesian Bank Restructuring Agency (IBRA) is tackling another
$30 billion in bank loans that have become non-performing loans.

Outside both agencies, there are also companies that seek debt
settlements on their own.