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Technology Stocks : INDONESIA'S PT TELECOM(TLK) -- Ignore unavailable to you. Want to Upgrade?

To: Joe who wrote (61)	1/22/1998 7:46:00 AM
From: Duke	Respond to of 947

Indonesian rupiah crashes through 12,000 barrier Analysts say plunge reflects deep concern about economic crisis and political situation By S N Vasuki THE Indonesian rupiah crashed through the 12,000 rupiah barrier -- its lowest ever -- against the greenback yesterday, with financial markets totally unappeased by the government's formal launch of sweeping reforms under the IMF-sponsored stabilisation programme. Analysts said that the alarming erosion in the rupiah's value reflects deep concern about the country's seemingly intractable economic crisis and the prospect of political instability. Not helping matters was foreign investors' adverse reaction to news that State Minister for Research & Technology BJ Habibie may be picked as Indonesia's next vice-president. But the rupiah managed to claw back to close Asian trading at 11,700. "This is like deja vu," said a Jakarta forex dealer. "We had a similar situation two weeks ago and that led to panic buying. The government must certainly be concerned." However, Jakarta was generally peaceful yesterday, including the traditional pasar and supermarkets which were recently stampeded by shoppers desperate to hoard essentials and staples. Nevertheless security was tight as Jakarta police started deploying 14,000 additional personnel on the streets of the Indonesian capital. President Suharto convened the first meeting of the newly established Economic Council yesterday to implement the first phase of economic reforms under the IMF stabilisation package. The Indonesian leader issued several decrees and instructions aimed at complying with the terms of the IMF package. The government yesterday scrapped Bulog's distribution monopoly over all commodities except rice. Both the national car and national aircraft ventures lost special tax privileges and budgetary support. Bank Indonesia has been formally granted autonomy in setting monetary policy. Foreign investment in the palm oil sector will be allowed with immediate effect. The government has also banned the collection of export levies. Finance Minister Mar'ie Muhammad will present the revised draft budget to parliament tomorrowwith a promise to boost rupiah spending and to achieve more than the zero GDP growth target set for 1998. Mr Suharto also instructed Bank Indonesia yesterday to speed up the implementation of "new and transparent" rules to resolve the liquidity problems in the private banking sector. BT reported yesterday that the central bank will soon unveil new measures that will significantly raise the minimum paid-up capital of local banks and establish a deposit insurance scheme aimed at helping small depositors. As a start, the government yesterday lifted some restrictions governing the setting up of branches by joint venture foreign banks and sub-branches by foreign banks. Although the government's swift implementation of IMF terms has been well received in the markets, two stumbling blocks for building investor confidence -- the problem of offshore corporate debt and the political situation -- are unlikely to be resolved anytime soon. Finance Minister Mar'ie Muhammad reiterated yesterday that the government would help the private sector in dealing with offshore debt obligations. But he emphasised that there would be "no bailout" by the government. Analysts also feel that the rupiah's volatility could seriously cut the ground from under Mr Suharto's feet. On Tuesday, Mr Suharto had accepted the ruling Golkar grouping's nomination to serve a record seventh term as president. While his re-election is regarded as a foregone conclusion, what is intriguing political observers is the expanded new criteria set by Golkar for selecting Indonesia's next vice-president. As the position is "important and strategic", Golkar has recommended that the new vice-president should understand "technology and industry" and also be capable of maintaining national unity. Observers feel that only one potential vice-presidential candidate, Mr Habibie, fits the bill. Economist Umar Juoro of the Centre for Information and Development Studies (Cides) told BT yesterday that Mr Habibie would be "good" for Indonesia. Mr Umar's think-tank, which has close links with Mr Habibie, acknowledged that the state minister did suffer from an "image" problem. "Financial markets are scared of him. They think he is in favour of large government spending and has a narrow vision," Mr Umar said. "Moreover Mr Habibie has not done a good job in convincing people that he is open-minded and plain speaking about national issues." The Armed Forces faction in parliament has already dismissed suggestions that it has endorsed Mr Habibie's candidacy. Other potential vice-presidential candidates include incumbent Try Sutrisno, Information Minister Raden Hartono and State Minister for National Planning Development Ginanjar Kartasasmita. Financial markets were also depressed yesterday by fresh calls demanding Mr Suharto's resignation. Muslim leader Amien Rais, leader of the powerful Muhammadiyah movement, told the Jakarta Post that Indonesia's economic reform plans could not succeed without political reforms. "Political reform should begin by replacing the national leadership, which has created the current system to sustain its power," Mr Amien said. "So it is impossible to reform the current political system without replacing figures at the top." He reiterated his willingness to contest in the presidential elections. "I have been very passive so far and have not campaigned for my presidential nomination," he said. "But if I see that the momentum is conducive, I will join my supporters to knock on the doors of the People's Representative Assembly (MPR)."

To: Joe who wrote (61)	1/22/1998 7:55:00 AM
From: Duke	Respond to of 947

International banks mull over joint Indonesian rescue plan [SINGAPORE] I nternational banks, saddled with US$65 billion (S$114.6 billion) in loans to Indonesian companies, have begun meeting to discuss ways to repackage the debt to avoid widespread defaults, bankers and government officials said yesterday. Faced with what investors say is a virtual "silent debt moratorium" by ailing Indonesian companies unable to repay their foreign-currency loans because of the plunging rupiah, the banks are quietly examining whether a joint rescue and debt management plan is feasible, bankers and analysts said. "Talks are underway," said Ralf Weingartner, a banker at German cooperative bank GZB-Bank AG, with exposure to Indonesia. "The banks are talking to each other, they're talking to the government, and they're in discussions with the borrowers." The task of crafting a restructuring plan is likely to be more difficult than a similar effort now underway between banks and the government of South Korea. While most of Korea's short-term debt is owed by a handful of banks, ABN Amro NV estimates that 90 per cent of Indonesia's foreign debt is spread among 1,000 to 1,500 Indonesian companies. Indonesia also faces political uncertainties that aren't present in Korea. President Suharto hasn't designated a successor, and the rupiah remains vulnerable to slumps every time concern rises about who will succeed 76-year-old ruler. "It's easy enough to sit down with the finance minister of Mexico and work out a financing arrangement," said Roy Ramos, head of regional banking research at Goldman, Sachs & Co in Hongkong. "It's a lot more difficult to reschedule loans to 100 creditors in Indonesia, and it's more difficult to guarantee those loans because of political ramifications." Given the difficulties, the discussions remain informal at this point, Mr Weingartner said. No banks have stepped forward to play a leading role, he said. -- Bloomberg