Taiwanese companies express interest in buying Indonesian banks

TAIPEI (JP): Two Taiwanese financial companies have expressed a strong interest in buying into ailing banks currently under the authority of the Indonesian Bank Restructuring Agency (IBRA).

Chief of the Indonesian Trade and Investment Mission to Taiwan Rahardi Ramelan said here on Friday the two firms -- KMT Group and Core Pacific Group -- were considering the possibility of providing capital to allow the banks to remain afloat.

"Their participation would... enable our debt-ridden banks and companies to settle their nonperforming loans," he said.

Rahardi, who is also the minister of industry and trade said the KMT Group, through its subsidiary the China Development Corporation, previously owned stakes in Bank Tamara, which was taken over by IBRA in March.

"They are very disappointed at the government's decision to take over Bank Tamara because they put a lot of investment into that bank.

"However, I told them that they could negotiate with IBRA to take over the government's shares in the bank," he said.

The government closed 38 ailing banks in March and took over seven private banks after their shareholders failed to meet the minimum capital adequacy ratio (CAR) of 4 percent.

CAR is the ratio between equity capital and risk-weighted assets.

The banks which were taken over are now under IBRA's control. Founders and other shareholders no longer have authority over them.

Rahardi said the Core Pacific Group had also expressed interest in establishing a subsidiary in Indonesia.

"They are currently operating a representative office in Jakarta. But they plan to upgrade the representative status into a full subsidiary so they can expand their business in Indonesia more effectively."

Rahardi said that he welcomed the company's plan.

He acknowledged that a lack of information on business opportunities in Indonesia and the recent economic turmoil contributed to a reluctance on the part of Taiwanese to invest in the country.

"Many of them do not know that we are restructuring our banks and our private companies' debts. They do not know that many companies are waiting for fresh capital."

He acknowledged that the problem was partly because Indonesia and Taiwan did not have diplomatic ties.

"We only run an Indonesia Economic and Trade Office here and they cannot work freely to enhance our trade. But even though we have no diplomatic ties, it doesn't mean that we can ignore Taiwan because it is a good market."

Rahardi said the trade balance between Indonesia and Taiwan in 1998 reached US$2.7 billion, a drop of 19.5 percent from 1997.

Indonesia's non-oil and gas exports to Taiwan reached $1.28 billion during the year, an increase of 3 percent compared to 1997.

Taiwan is the sixth biggest foreign investor in Indonesia. Approved investment reached $165 million in 1998, or about 2 percent of the total approved foreign investment of $13.6 billion that year. (gis)