THE JAKARTA POST – President Abdurrahman Wahid’s economic advisors warned the government on 25 July 2000 against arbitrarily annulling the debt-settlement agreements already concluded by indebted bankers and the Indonesian Bank Restructuring Agency (IBRA) in late 1998.
Sofyan Wanandi, Chairman of the National Business Development Council, and Sri Mulyani Indrawati, secretary of the National Economic Council, cautioned that the government should have a strong legal basis for changing the debt-settlement deals.
“Whatever the government does should be entirely within proper legal guidelines to ensure validity,” Sofyan told reporters in commenting on Coordinating Minister for Economy, Finance and Industry Kwik Kian Gie’s remarks on Monday, 24 July 2000.
Kwik said the government was reviewing the Master of Settlement and Acquisition Agreement (MSAA) between several former bank owners and IBRA whereby the debtors surrendered their assets to repay their debts to the government.
Among the major indebted bankers signing the agreements were the Salim group, Mohammad ‘Bob’ Hasan, Usman Admadjaja, Syamsul Nursalim and Ibrahim Risyad.
Kwik argued that if the MSAAs were not canceled or reviewed, they would incur huge losses for the government and taxpayers as the value of the ceded assets turned out to be far below the outstanding indebtedness.
Sofyan, however, argued that the MSAAs were concluded after vigorous negotiations where both the debtors and government were assisted by the country’s best lawyers and the agreements were endorsed by the International Monetary Fund.
“If the government can easily change or cancel any agreement long after it was signed, where then is our legal certainty,” he added.
He argued that asset values could fluctuate sharply or fall steeply, especially amid the economic crisis the country is facing, but this by itself cannot be a legitimate reason for canceling a legitimate agreement.
“Businesspeople badly need law certainty and stable conditions in order to fuel economic recovery,” Sofyan said, adding that any controversial plan as cited by Kwik could further dampen investor interest.
Sri Mulyani said there was still room for renegotiation between the government and the debtors to iron out the best solution to the problem.
“As long as both sides renegotiate in good faith, the difference of views regarding the debt-settlement agreements could still be worked out,” she added. | THE JAKARTA POST / 26 July 2000