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)