Kadin hails creditors' moves on loans to firms

JAKARTA (JP): Chairman of the Indonesian Chamber of Commerce and Industry (Kadin) Aburizal Bakrie hailed on Wednesday efforts by several international creditors to renegotiate loan repayments from local companies.

Aburizal said out-of-court settlements were the best approach in dealing with the country's mounting private debt because they benefited both parties.

"I really appreciate such a decision and I expect more creditors and more debtors would resort to such an approach in dealing with their debts," he said.

Several foreign creditors have approved proposals of Indonesian clients to renegotiate their loans. Ometraco, for example, announced recently that the company and its foreign creditors had agreed to form a special team to renegotiate its loan.

Aburizal said Ometraco's approach should be followed by other local companies because it was the only avenue for local debtors to survive the crisis and repay their loans.

He said out-of-court settlements were preferable both to debtors and creditors because any court ruling would leave both with the remnants of the company to fight over.

Aburizal said Indonesian borrowers had to talk directly about their debt problem with their creditors even though the country's private foreign debt settlement team and foreign creditors had signed a deal in Frankfurt in June.

He said the Frankfurt debt accord should be followed by bilateral talks between borrowers and creditors.

"The International Monetary Fund's concern on Indonesian companies foreign debts, implemented in its latest agreement with the government, is very positive. I hope that the meeting with 300 creditors on Nov. 2 to Nov. 3 in Jakarta will bring more good news."

The corporate sector's total foreign debt amounts to more than US$64 billion, of which $34 billion is due this year.

Aburizal said he also hoped that Indonesian companies could fully benefit from the Jakarta Initiative scheme to settle their domestic debts out of commercial court.

The Jakarta Initiative's task force, which will open its operations next month, was expected to be able to set an appropriate basis for the private sector's domestic debt settlement, he said.

The government introduced last month the Jakarta Initiative, a move to spur the recovery of the paralyzed private sector by providing incentives and eliminating regulatory obstacles to reaching out-of-court domestic corporate debt restructuring agreements.

A four-point plan outlines the steps which debt-ridden companies should take when negotiating agreements with creditors on corporate and debt restructuring in order to give them access to working capital.

According to the private debt settlement team, the country's private sector debt owed to domestic banks was Rp 691.7 trillion ($57.64 billion) as of June. (gis)