Kadin clarifies statement on S'pore loans

Kadin clarifies statement on S'pore loans

JAKARTA (JP): The Indonesian Chamber of Commerce and Industry
(Kadin) said yesterday that it never asked the government to bail
out large, privately owned businesses.

The chamber's chairman, Aburizal Bakrie, called on big
businesses to tackle their liquidity problems on their own rather
than seek government help.

Clarifying his previous statement, Aburizal said the chamber
welcomed Bank Indonesia's statement on Nov. 25 that it was
negotiating the use of Singapore loans for small and export-
oriented firms.

"Kadin Indonesia never asked the government to pay the
liabilities of big businesses. And, concerning funds committed by
Singapore, I never said that it would be used for big businesses.

"From the statement of Bank Indonesia on Nov. 25, it is clear
that it is not the dollar, but the rupiah derived from the
intervention, which will be used to help small and export-
oriented firms and certainly not big businesses."

Aburizal sparked a controversy two weeks ago in Cape Town,
South Africa, when he quoted President Soeharto as instructing
the monetary authorities to disburse Singapore's $5 billion
stand-by facility to help medium and big businesses.

The statement caused a furor, with Singapore Prime Minister
Goh Chok Tong responded by saying that the Singapore loans would
be used only to support Indonesia's balance of payments, not to
bail out insolvent private firms.

Last night, Singapore Minister of Finance Richard Hu met with
his Indonesian counterpart, Mar'ie Muhammad, in Kuala Lumpur to
seek clarification about Singapore's loans to Indonesia.

"There is no misunderstanding. There are a lot of rumors in
the market, and I think our agreement still stands exactly the
same. It's clear in my mind and confirmed by Mar'ie," Hu told
journalists after the meeting.

Aburizal thanked the government yesterday for its efforts to
lobby foreign creditors, especially those in Japan, to roll over
their loans to Indonesian corporations.

Bank Indonesia's managing director Paul Soetopo Tjokronegoro
said last week that at least 40 percent of private short-term
foreign debt due for repayment by March 1998 might be rolled
over.

Paul said that the rollover of private debt followed lobbying
by the Indonesian government with creditors in Japan.

Aburizal told local big businesses to properly manage their
offshore debts to prevent default, because if one company
defaulted it could damage Indonesia's standing.

"Therefore, Kadin Indonesia hopes that big businesses solve
their problems by focusing on their core business," Aburizal
said.

The chamber also asked the government to lower interest rates
and inject more liquidity into the market because current levels
were not enough to drive economic activities.

"Kadin believes the easing of liquidity does not mean helping
big businesses meet their obligations, but to fuel our national
economic activities," Aburizal said.

He argued that loosening liquidity would not harm the
inflation rate, provided the distribution of goods and services
proceed without too many controls. (rid/das)