Local private debt put at $23 billion

Local private debt put at $23 billion

JAKARTA (JP): Private Indonesian companies account for only
US$23.07 billion of the $73.96 billion in foreign debts owed by
the country's private sector, the government has announced.

Radius Prawiro, chairman of the Corporate Foreign Debt
Settlement Team, said yesterday that foreign firms and joint-
venture companies carried the bulk of the private sector debt.

He said Indonesia's foreign debt totaled $137.42 billion as of
December, of which the government and state enterprises owed
$63.46 billion.

"So you may notice that the outlook on our corporate debts is
not as bleak and scary as many have painted because the bulk of
the debts is owed by foreign firms and joint venture companies,"
Radius said.

"Of the total corporate debts, $8.46 billion is owed by
national and foreign finance companies, $53.58 billion by wholly
foreign-owned firms and Indonesian-foreign joint ventures and
$23.07 billion by private national firms," added Radius.

The remaining $11.9 billion consisted of promissory notes,
commercial paper and medium-term notes.

Radius announced the latest foreign debt figures, which he
said were obtained from the central bank, after he and his team
briefed President Soeharto and the Economic and Monetary
Resilience Council on the latest developments in the efforts to
settle corporate foreign debts.

The team, set up by the President last month, categorized
corporate debtors into three groups.

The first group consists of private national debtors able to
service their debts and wholly foreign-owned firms and joint
venture companies.

"This group of companies obviously should not use our
facilitating services in settling their foreign debts as they can
do it by themselves," Radius said.

The second group includes financially distressed private
national debtors which will be assisted by Radius' team in
negotiations with foreign creditors.

"But these debtors should negotiate under the basic framework
of the creditors' steering committee and debtors' contact
committee and within the general guidelines and rules we set," he
added.

The third group consists of private national corporate debtors
not able to settle their debts even under the basic framework
provided by the team.

"This group of debtors should settle their debts to their
foreign creditors through a legal process. To facilitate this
legal route, the government will soon enact a new bankruptcy
law," Radius said.

The maturity schedules of the foreign debts, however, were
still being collated, he said.

Radius, accompanied by team member Anthony Salim of the Salim
Group at the news conference, reiterated the basic principles by
which his team was working to facilitate debtor-creditor
negotiations.

"The government will not get involved in negotiations and will
not give any guarantee for corporate debts. Debt settlement
should be made on a case-by-case basis.

"Moreover, creditors should negotiate directly with debtors on
a bilateral basis and any debt settlement should be voluntary,"
he added.

The team proposed last month a temporary halt in servicing
Indonesia's huge foreign corporate debts in a bid to ease
pressure on the beleaguered rupiah and to allow for orderly
negotiations.

Radius said a steering committee of creditors and a contact
committee of debtors would work soon to resolve the corporate
debt issue, based on voluntary, bilateral agreements between
lenders and borrowers.

The memberships of the committees would be announced in the
near future, Radius said.

"But Japan has officially assigned the Bank of Tokyo,
Mitsubishi and Sanwa Bank as the representatives of Japanese
creditors in the steering committee," added Radius who last week
traveled to Tokyo to meet with Japanese bank creditors.

Anthony said the debt solution standards would be based on
internationally acceptable norms because the language and
solutions should be acceptable to both sides.

Radius said the government's soon-to-come bankruptcy law would
provide the legal basis for expediting the process of liquidating
insolvent companies.

"Companies which are not able to service their debt within the
framework set by the team will have to take the legal route,"
Radius said. (prb/vin)