Private firms must report foreign debts

Private firms must report foreign debts

JAKARTA (JP): The government will introduce a new ruling to
force private sector companies to report their offshore borrowing
to the central bank as most of them have been reluctant to make
reports due to the absence of penalty, a senior official says.

Speaking at a seminar on the implementation of the
government's liberalization regulations yesterday, Paul Soetopo
Tjokronegoro, a director of Bank Indonesia, however, said that
such a measure will not bring Indonesia back to its controlled
foreign exchange policy, although the existing 1964 law on
foreign exchange recognizes it.

"There's just no way of returning to the foreign exchange
control with the world economy becoming more integrated and
transparent," Paul told the seminar in defense of the government
ruling.

Indonesia dismantled its policy on the control of foreign
exchange in the late 1960s to smoothen the inflow of capital for
development.

In 1972, the central bank issued instructions to all foreign
exchange banks to report their commercial offshore borrowing to
the central bank. However, since the government deregulated the
banking industry in 1983, the central bank has lost its grip on
private banks.

"We no longer know what the debts are for," Paul said.

In 1991, the government announced a policy aimed at
controlling the inflow of commercial offshore borrowing to secure
the country's balance of payments.

Paul explained that this year almost 80 percent of private
borrowers did not report to Bank Indonesia about their offshore
borrowing.

"Accurate data on foreign debts is very important for the
government, especially in policy making," Paul said.

Paul noted that Bank Indonesia collects data on private
offshore debts from banks and foreign lenders. "As for government
debts, they are all well recorded."

Minister of Finance Mar'ie Muhammad said this week that the
outstanding debts of the private sector surged by $6.8 billion
within three months to $36.34 billion as of the end of September,
while the government's outstanding borrowing fell by almost $3
billion to $56.66 billion in the same period.

Paul said the borrowers will get benefits from reporting their
foreign debts to Bank Indonesia by way of no-fee technical
assistance from the central bank to protect them from any
deviations from their loan agreements.

"If they report to us before signing the contracts, we will
help them in preparing the loan agreements, in this case, the
terms of the agreements," Paul said. (rid)