JITF to restructure $5b debt in 2002

The Jakarta Post, Jakarta

The Jakarta Initiative Task Force (JITF) aims to finalize the restructuring by as much as US$5 billion in corporate debt in 2002, before its mandate ends at the end of the year, according to its chairman Becelius Ruru.

Ruru said on Wednesday that achieving the target would depend on the development in economic, political, and monetary fronts.

"But we'll try to achieve the target," he told reporters during a gathering.

He also said that the tax discount facility being offered to debtors would only be valid until the end of this year as stipulated by the country's tax law.

Indebted companies obtaining debt reduction from creditors can enjoy a 30 percent income tax discount if the debt restructuring process is being mediated through the JITF.

According to the country's tax law, a debt reduction is regarded as a gain to the debtors who are subject to income tax.

Ruru said that three companies including cement maker PT Semen Cibinong, distribution firm PT Wicaksana Overseas and PT Siemens Cable Optic had enjoyed the tax facility.

JITF was established in 1998 by the government in a bid to mediate restructuring talks between the country's indebted corporate sector and foreign creditors. Funding for the Task Force comes from World Bank loans.

The restructuring of overseas corporate debt, which amounts to more than $60 billion according to JITF, is crucial to help ease the pressure on the rupiah.

As of end of 2001, JITF has finalized the mediation of restructuring talks worth around $14.31 billion out of the total $22.19 billion corporate debts registered at the Task Force.

Ruru said that it was too early to say whether the government would extend the JITF mandate period beyond 2002.

But he acknowledged that the role of a mediation institution was crucial in accelerating the restructuring of the country's corporate debts.