Legal action a must for bad debtors: Kwik
Legal action a must for bad debtors: Kwik
JAKARTA (JP): The government must start taking legal action
against the country's recalcitrant debtors and former bank owners
as one of the preconditions set to obtain the next loan
disbursement from the International Monetary Fund (IMF),
Coordinating Minister for the Economy, Finance and Industry Kwik
Kian Gie said on Wednesday.
He said other conditions included the necessity for the
Indonesian Bank Restructuring Agency (IBRA) to start disposing
its assets, announce plans to sell two banks and publish a
trimonthly asset sale schedule for this year.
"(These) steps must be taken before signing the letter of
intent (LoI)," he said in a statement issued after a Cabinet
meeting.
Kwik said the government expected to sign a new letter of
intent with the fund by the middle of July, paving the way for
the next IMF loan disbursement of US$380 million in early August.
A letter of intent is a set of economic reform programs to be
implemented by the government within a certain timeframe. The IMF
will disburse its loan to Indonesia if its board of directors
approves the letter of intent.
The IMF agreed in January to disburse some $5 billion to
finance the country's three-year economic reform program. So far,
the fund has disbursed more than $700 million.
Kwik also said the implementation of the letter of intent,
signed with the fund last month, had made "significant progress"
and the government was on track to meeting its June 30 deadline.
He said the economic team was expected to confirm the
completion of the program with the IMF on July 5.
Kwik said taking legal action against the unruly debtors was
crucial to maintain the credibility of the government's asset
restructuring program as contained in the previous letter of
intent.
Kwik did not provide any details.
IBRA currently controls about Rp 220 trillion of bad debts
transferred from domestic banks.
The agency is also mandated to make sure that former bank
owners, whose banks received massive liquidity support from the
government, repay their obligations.
IBRA's strategic objective is to focus on restructuring 21 of
its largest obligors. An obligor is a batch of debtors owned by
a single business group.
IBRA has been strongly criticized for its slow progress in
forcing the debtors to repay their obligations.
Minister of Finance Bambang Sudibyo recently warned the
uncooperative debtors to repay debt or risk legal action,
including imprisonment and seizure of assets.
"We will seize the assets of uncooperative debtors and
prosecute the person or persons. This is our firm decision,"
Bambang said during a hearing with the House of Representatives
Commission IX for financial and development planning affairs.
IBRA has also been criticized for its slowness in disposing
its huge assets.
The agency controls about Rp 600 trillion worth of assets
transferred from former bank owners and closed banks.
The agency is targeted to raise Rp 18.9 trillion this year to
help finance the state budget, but so far it has only raised
about Rp 2.8 trillion.
IBRA has said it plans to sell between 12 and 14 companies
this year, and to divest its ownership in Bank Internasional
Indonesia, Bank Universal, Bank Niaga and Bank Central Asia.
Kwik said on Tuesday that IBRA must immediately sell its
assets, including implementing a fire sale approach if necessary,
to be able to meet the Rp 18.9 trillion target in the remaining
period of this year.
Elsewhere in the media statement, Kwik said the government has
yet to reach agreements in several other areas.
He pointed out the plan to privatize the government majority
ownership in state-owned enterprises (SOEs), except on certain
strategic SOEs.(rei/byg)