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.