Our foreign private loans problem

Neither Ginandjar Kartasasmita nor Radius Prawiro -- the two economists appointed, first by the previous regime's Seventh Development Cabinet and then by the present Reform Development Cabinet, to tackle Indonesia's private offshore debt problem -- could hide the relieve they felt (over the rescheduling arrangement reached with foreign lenders). To (business expert) A.A. Baramuli, though, things looked different. He questioned the capability of any of the country's private companies to pay an estimated US$15 billion a year in interest only, even though they could make the payment in the rupiah currency equivalent.

Moreover, the government's intervention in the problem of this country's private corporate debts owed to foreign banks raises questions, even though the government has assured that it will not bail out private companies. By intervening in our private sector's debt problems, the government is also putting its own credibility at risk. According to the chairman of the Indonesian Chamber of Commerce and Industry (Kadin), Imam Taufik, this move could diminish foreign trust in the government -- a most important consideration in luring back foreign investors to Indonesia. Another problem is that private sector borrowers in this country might already transferred their money overseas.

What the public in general fears is that our private borrowers might simply refuse to repay their debts and wait until the situation here has returned to normal. They might then change both their names and their citizenships and become investors "with an interest in investing in Indonesia".

The Indonesian people would thus remain the milching cows of international rogues making use of both the ignorance of our people and the disposition of those of our leaders who, in the words of (Indonesian sociologist) Prof. Selo Soemardjan, are greedy and indifferent to the interests of our people.

-- Merdeka, Jakarta