Troubled companies look to Miyazawa Plan for salvation
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)