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)