Private firms only need moral support: Sofjan

Private firms only need moral support: Sofjan

JAKARTA (JP): Private companies will not ask for financial
assistance from the government to deal with their offshore loans,
an executive said.

Sofjan Wanandi, the chairman of Gemala Group, said here
yesterday that most local companies still have money to repay
their debts.

"We only need moral support from the government. We will never
ask the government to repay our foreign debts," Sofjan, once
known as the spokesman for Indonesian's major conglomerates, said
on the sidelines of a seminar exploring ways to survive the
currency turmoil.

Sofjan said that the minister of finance's recent statement
that the government would never bail out private companies gave
the impression that they could not meet their debts, which,
according to Bank Indonesia, totaled US$65 billion as of
September.

"This damages foreign creditors' trust in Indonesian private
companies."

He admitted there would be some companies that could not meet
their debts but their number was very small.

Sofjan said that some foreign creditors had asked private
companies to repay debts prior to the maturity date because of
the government's statement.

"All we need is moral support from the government to restore
foreign creditors' confidence in the private sector because we
have to work together to solve this crisis," he said, adding that
the government could help the companies by lobbying foreign
creditors to roll over short-term loans.

Minister of Finance Mar'ie Muhammad reiterated Tuesday that
the government would not bail out the private sector.

But he said the government would help businesses lobby foreign
creditors, especially those from Japan, to roll over loans to
Indonesian firms.

The minister's statement was apparently made to clarify
controversy surrounding the use of the $23 billion package
provided by the International Monetary Fund (IMF).

Donors feared that part of the aid would be used to bail out
private companies by paying their offshore loans.

Bank Indonesia's Governor J. Soedrajad Djiwandono announced
last week that at least $9.6 billion of the total $65 billion in
private sector foreign debts would mature by March.

Economist Miranda S. Goeltom said that there was no reason for
the government to bail out the private sector.

"How can the government pay those debts if the government
itself has no money," she said, adding that the private companies
have to take full responsibility for having such huge debts.

Miranda -- who is deputy assistant for the coordinating
minister for economy and finance -- said that the government's
refusal to bail out businesses did not indicate that the
government had no sympathy for the private sector.

"The government is still concerned, but it cannot help."

She said that the government could not use the loans from the
IMF for a private sector bailout because it would destroy foreign
creditors' confidence in the Indonesia economy.

Economist Sri Mulyani of the University of Indonesia hailed
the statement of Indonesian Chamber of Commerce chairman Aburizal
Bakrie last month which suggested private companies sell off some
of their assets to settle financial debts.

But Sri said that the assets have to be sold to foreign
investors due to the downturn in the domestic market.

"How can the local investors buy (assets) if they don't have
sufficient funds themselves," she said. (gis)