RI seeks help from Japan

JAKARTA (JP): President Soeharto has asked Japan to use its influence to help resolve Indonesian corporate foreign debt, which caused the rupiah to crash to almost 17,000 to the U.S. dollar yesterday.

Soeharto told a visiting Japanese mission, led by Deputy Foreign Minister Masahiko Koumura, that the government would continue to help private firms in their negotiations with foreign creditors, but would not bail them out.

"Bapak President hopes the Japanese government will use its influence to find a way to resolve private sector debt so it won't put more pressure on the weakening rupiah," Minister/State Secretary Moerdiono told journalists after accompanying Soeharto in a meeting with Koumura.

Indonesia's outstanding external debt totaled US$140 billion at the end of last year, of which $65 billion was corporate debt.

Moerdiono said Soeharto also asked Japan's help to boost Indonesia's non-oil exports to improve the country's international trade balance.

"It has been difficult to import raw material for export products recently because banks abroad refuse to accept letters of credit from Indonesia," he said.

Moerdiono said Koumura presented a special letter from Prime Minister Ryutaro Hashimoto to Soeharto yesterday.

He said Japan had paid a lot of attention to Indonesian efforts in overcoming the monetary turmoil and it would give full support, including financial support.

"The Japanese prime minister hopes Indonesia can implement as well as possible the agreement on restructuring the economy that it has signed with the IMF (International Monetary Fund)," Moerdiono said.

Koumura and his entourage also met with Vice President Try Sutrisno and Minister of Foreign Affairs Ali Alatas yesterday.

Secretary to the Vice President Sujoko said Japan would provide 50 billion (US$400 million) in additional quick disbursement aid to Indonesia to support the implementation of a reform program arranged by the IMF in exchange for a $40 billion bailout package.

Sujoko, who accompanied the Vice President in a meeting with Koumura, said the 50 billion would complement an earlier pledge of 20 billion under the framework of the IMF aid package.

"The 20 billion and 50 billion are quick disbursement loans, especially for poverty alleviation programs. Maybe these are for labor-intensive projects," Sujoko said.

Sujoko said the 50 billion yen would be included in Japan's 1998 loan commitment under the framework of the Consultative Group on Indonesia.

Koumura arrived in Jakarta Wednesday and returned yesterday. He was accompanied by senior officials from the Japanese ministries of finance, trade and foreign affairs.

The surprise dispatch of a mission to Jakarta by Hashimoto prompted speculation in the market that Tokyo is ready to help secure capital flows, which have tapered off as foreigners repatriate private capital amid the rupiah crisis.

However, a senior Japanese government official told Reuters on condition of anonymity yesterday that although Tokyo strongly backed Jakarta's structural reform program, it would not be hurrying to pour new cash into the troubled economy.

"As soon as possible, Japan may disburse 20 billion in aid that has been set aside to help alleviate pains of Indonesia's structural reform," the government official said.

"But I'm not aware of any new financial commitment (being considered) by the government at the moment."

Japanese officials make no secret of Tokyo's keen interest in Indonesia's political and economic stability, or that it is willing to continue to assist them financially.

But political considerations, including the possible reelection of President Soeharto, had made extending new money risky, the Japanese government official said.

A senior Ministry of Foreign Affairs official declined to comment on whether the Japanese government supported Soeharto's administration.

Japan is Indonesia's largest creditor and aid donor. Japanese banks, themselves in a precarious state, have extended more than one-third of Indonesia's foreign borrowings, while the country has topped Japan's official development assistance (ODA) list for the past six years.

Indonesia received 190.05 billion in Japanese ODA loans in 1996/1997 and 170.07 billion in 1995/1996.

The Export-Import Bank of Japan, a quasi-governmental organization, also disbursed 205 billion in loans to Indonesia in 1996/1997 -- the second largest after China.

As of the end of June 1997, Japanese banks accounted for 39 percent, or $23 billion, of Indonesia's $58.7 billion in foreign bank debt, according to the Bank for International Settlements. (prb/rid)

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