JITF on track to meet debt restructuring target

JITF on track to meet debt restructuring target

The Jakarta Post
Jakarta

The Jakarta Initiative Task Force (JITF), which facilitates
the restructuring of the country's huge corporate debt, is on
track for meeting this year's restructuring target of US$14
billion in debt, despite the unfavorable macroeconomic situation.

Secretary of the Financial Sector Policy Committee (FSPC)
Syafruddin Temenggung said on Tuesday that as of mid-December,
JITF had managed to restructure some US$13.5 billion in
corporate debt.

FSPC, which groups several senior economic ministers led by
the coordinating minister for the economy, has the final say on
the major corporate and bank restructuring program.

In 1998, the government set up the agency to help accelerate
the restructuring of the country's massive corporate debt,
particularly overseas debt, which totaled around $70 billion.

The task force plays a mediating role between debtors and
creditors, but they cannot be forced to use the mediation
facilities provided by JITF.

Restructuring the country's corporate debt has been a major
headache, partly due to the volatility of the rupiah and rising
interest rates.

A successful debt restructuring program would bring back
confidence among foreign investors and therefore prompt them to
keep flowing their lines of credit to domestic industries.

Separately, State Minister of State Enterprises Laksamana
Sukardi said on Tuesday that the Indonesian Bank Restructuring
Agency (IBRA) had established a team to oversee the planned
merger of five banks under the supervision of the agency.

He reaffirmed an earlier statement that the formal merger of
the ailing banks would be completed before the end of this year.

However, Syamsuddin reiterated that the government was not
aiming for the planned legal merger to be finalized this year,
saying, "The legal merger does not have to take place this year."

The banks are: Bank Universal, Bank Bali, Bank Patriot, Bank
Prima Expres and Bank Artha Media. The banks must be merged to
avoid closure.

Syafruddin also said that the government had yet to decide
which of the five banks would be "the surviving bank".

Commenting on a plan to divest Bank Central Asia (BCA), he
said that the FSPC had not yet made any decision on whether or
not to delay the sale.

He said: "There's no policy yet on whether to delay it or
not."

IBRA, which controls BCA, has been targeted to complete the
sale of the government stake in BCA before the end of this year.

However, certain senior government officials indicated earlier
that the sale might have to be delayed again as foreign bidders
needed more time to carry out their due diligence investigations.