Wise approach needed in handling bad debts

JAKARTA (JP): The government should take a wise approach in handling the mounting bad debts of private companies owing funds to state-owned banks, says a noted business analyst.

Christianto Wibisono, the director of the Indonesian Business Data Center, said yesterday that debt scheduling might be a better solution for bad debts which have emerged due to marketing problems.

On the other hand, severe punishment should be imposed on borrowers which have been involved in bad debts caused by mismanagement, he said.

"The mismanagement could be engineered and it is a crime, and could involve bank executives," he said.

Christianto said the debt scandal in the state-owned Bank Bapindo, involving Eddy Tansil and four top executives of the bank, is an example of how a borrower and bank executives colluded to manipulate state funds.

Eddy, charged with manipulating Bapindo's loans of around US$620 million, is now being tried in court. The four bank executives are also being tried for their alleged involvement in the debt scandal.

Eddy is one of the 50 businessmen reported to have incurred bad debts of above Rp 100 billion ($47.5 million) in the country's six state-owned banks -- Bapindo, Bank Negara Indonesia, Bank Bumi Daya, Bank Dagang Negara, Bank Ekspor Impor Indonesia and Bank Rakyat Indonesia.

Assessment

Christianto suggested that assessing the external and internal factors of borrowing companies is essential so that the handling of bad debt problems could be carried out effectively.

"If the solution is wrongly handled, the managing of bad debts could strongly affect the country's economy," he said, adding that debt relief in the form of debt rescheduling could be extended to borrowers, who could not pay their debts due to marketing failure, while those who abuse loan facilities should be taken to court.

"The rescheduling of Gemala Group's debt of $30 million to Bank Bumi Daya, for example, is beneficial for both the borrower and the lender," he said.

Bank Bumi Daya was reported to have rescheduled the Gemala Group's debts of around $30 million, extended by the bank to finance the group's purchase of a battery plant in Britain.

Christianto said that Gemala Group is one of a number of Indonesian companies which failed to manage their overseas operations effectively due to their lack of experience.

"Mantrust, Bentoel, Summa and even Salim Group also had a bitter experience in their overseas operations," he said. (hen)