Troubled companies look to Miyazawa Plan for salvation

JAKARTA (JP): The business sector here is hoping that aid disbursed under the auspices of the Miyazawa Plan will help to bail out firms facing the prospect of bankruptcy, according to a leading businessmen.

Fadel Muhammad, who is a director of the Indonesian Chamber of Commerce and Industry (Kadin), said on Monday that over one thousand companies were in urgent need of fresh capital to stave of bankruptcy.

He pointed out that domestic banks would be unable to begin issuing fresh credit this year while going through a painful process of restructuring.

"If the Miyazawa Plan comes on stream we can save our national assets," he said after a meeting with Coordinating Minister for Economy, Finance, and Industry Ginandjar Kartasasmita.

Ginandjar is scheduled to discuss the release of funds from the US$30 billion Miyazawa Plan during a meeting with Japanese officials scheduled for January 17. Japanese Finance Minister Kiichi Miyazawa proposed the plan last year as a means of assisting crisis-hit Southeast Asian nations.

The Indonesian government hopes to secure $3 billion under the plan.

Fadel said that resuscitating the real sector was of equal importance to restructuring the troubled banking sector.

He urged the government to use aid from the Miyazawa Plan to temporarily take control of struggling companies and thereby prevent any further job losses.

"This may be against the privatization agenda, but it is very important to prevent more layoffs and widespread social unrest," he said.

He said that the management of companies brought under government control should then be handed over to specially selected "capable businessmen."

He said that aid from the plan would help to meet the 1999/2000 budget deficit, which is expected to reach 4.8 percent of gross domestic product.

He expressed confidence that current political uncertainty would not prove a major obstacle to being granted the aid.

"Our political situation is still uncertain, but I expect we will still be granted the aid. If not, our economy will get worse," he said.

In a recent announcement detailing the draft 1999/2000 state budget, the government said that foreign donors would provide $10.32 billion to meet the expected deficit. Most of the budget deficit will be met by the World Bank and the Asian Development Bank. The figure excludes aid from the Miyazawa Plan.

Analysts said that the Japanese aid would be crucial because of the strong possibility of tax revenue targets falling short of their expected level as a result of the recession. (rei)