One-year debt repayment plan 'unrealistic'

One-year debt repayment plan 'unrealistic'

JAKARTA (JP): The Indonesian Society of Appraisers (MAPPI)
said on Friday that forcing the owners and former owners of
troubled banks to repay their government debts within one year
was unrealistic.

MAPPI chairman Karsono Suryowibowo suggested that a realistic
requirement would be a combination of a cash and asset-for-loan
payment method since the property market was now reeling from the
economic crisis.

"As a citizen I agree that the debt should be repaid in one
year. But where will they get Rp 140 trillion in cash? If they
sell the assets immediately, the price would be very low," he
told reporters on the sidelines of a hearing with the House of
Representatives Commission VIII for finance and state budget.

He proposed that assets surrendered to the government-
sponsored asset management unit (AMU) be first valuated by
independent appraisers under a forced-sale value method, and the
assets could then be sold by the AMU on a "normal time schedule"
to get an optimum market price.

He added, however, that the valuation basis for selling the
assets should use a market value method.

"In case the bankers want to redeem their assets, the market
value method should also be used."

President B.J. Habibie early this month ordered debt-ridden
bank owners to repay more than Rp 141 trillion (US$15.6 billion)
in Bank Indonesia liquidity support in cash within one year.
Earlier media reports had said the bankers would be given five
years.

The owners of the 14 troubled banks, among the country's most
prominent business tycoons, will face stiff legal action if they
fail to meet the deadline, Habibie warned.

The government had earlier set a Sept. 21 deadline for the
businessmen to repay the debt, but only two managed to meet the
deadline by pledging fixed assets. They were the Salim Group, ex-
owner of the nationalized Bank Central Asia, which owed Rp 35
trillion in liquidity support and Rp 13 trillion to recover its
intra-group lendings to the 20 percent legal lending limit, and
the Gadjah Tunggal Group, owner of the suspended Bank Dagang
Negara Indonesia, which owed a total of Rp 30 trillion.

Others who failed to meet the Sept. 21 deadline, however,
later promised to surrender fixed assets in exchange for the
loans. They included Mohamad "Bob" Hasan, co-owner of suspended
Bank Umum Nasional and a long-time golfing partner of former
president Soeharto, and property mogul Usman Admajaja, the former
owner of nationalized Bank Danamon.

The government later rejected the fixed assets-for-loan
payment method because the asset values claimed by the bankers
were much different than the government's valuation and due to a
public uproar that most of the waived assets were categorized as
worthless.

President Habibie then decided that the repayments be made in
cash within one year. (rei)