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

To: Duke who wrote (143)	1/27/1998 7:46:00 AM
From: Duke	Read Replies (1) \| Respond to of 947

New Japan plan to help Jakarta may be announced this week Plan may involve additional support lines for rupiah or guaranteed loans By Anthony Rowley JAPANESE finance ministry officials yesterday professed ignorance on the contents of a new plan mooted by the ministry's International Finance Vice-Minister Eisuke Sakakibara to aid Indonesia but they suggested that an announcement is likely this week. The plan may involve additional support lines for the beleaguered rupiah or officially-guaranteed loans from Japan, sources said. ÿ <Picture: Worries linger> Mr Sakakibara suggested on Japanese television last weekend that Japan would cooperate with the International Monetary Fund in drawing up additional measures to help Jakarta. "We will never let Indonesia down, at any cost," he said in a statement that underscored the strong economic and historical ties between Japan and Indonesia. The senior finance ministry official declined to specify what new measures he had in mind beyond saying that they "need not be drastic". Mr Sakakibara had earlier suggested that the United States and Singapore might also be involved with Japan and the IMF in providing fresh support for Indonesia but he made no mention of this during his television appearance. Japan and Singapore have already agreed to supply Indonesia with US$5 billion (S$8.8 billion) each by way of so-called "second-line" dollar swap arrangements to support the rupiah, a finance ministry official in Tokyo noted last night to BT. The US also contributed US$3 billion to this arrangement while Australia, China, Hongkong and Malaysia supplied more modest amounts. The total of around US$13 billion involved was in addition to "first-line" support of US$23 billion made available to Indonesia under an IMF package but some sources suggested last night that the collapse of the rupiah has been so dramatic as to render these amounts inadequate for underwriting the currency. The rupiah fell as much as 15 per cent in early trading yesterday. It steadied to close down 1.5 per cent at 12,950 to the US dollar. Jakarta wishes to mount a serious defence of the rupiah and to place a credible floor under the currency. It may need longer-term loans to bolster its official reserves in addition to the kind of short-term swaps (usually backed by the collateral of holdings in US Treasury securities) that was agreed to late last year, the sources suggested. While it is unlikely that the Sakakibara plan will involve Japanese banks agreeing to provide Indonesia with medium-term loans to bolster its reserves at their own risk, the Japanese government is known to have been mulling for some time the idea of providing guarantees by Japanese public institutions such as the Japan Exim Bank. Japan has a strong motivation to provide such assistance. Indonesia is Japan's largest supplier of natural gas and a significant source of Japanese oil imports. Indonesia also ranks among the top three destinations for Japanese foreign direct investment and nearly one-third of all Indonesian borrowing from foreign banks is from Japanese institutions. Japan is also the primary source of foreign aid to Indonesia, reflecting strong ties that pre-date World War II. Meanwhile, Australian Foreign Minister Alexander Downer said yesterday that Canberra is considering backing lines of credit used in trade with Indonesia. "We are prepared to look at the possibility of providing some government cover for lines of credit to ensure that the trading relationship remains a strong relationship," he told reporters after meeting Indonesian President Suharto. The matter will have to be considered by Prime Minister John Howard and the cabinet, Mr Downer added.

To: Duke who wrote (143)	1/27/1998 7:49:00 AM
From: Duke	Read Replies (1) \| Respond to of 947

Morgan Stanley, Merrill in Indon debt talks Investment banks suggest ways to address crisis [JAKARTA] Morgan Stanley & Co and Merrill Lynch & Co said they're in talks with the Indonesian government on steps needed to get the country out of its corporate debt crisis. "We have recently had discussions on . . . ways to address the current financial situation in the country," a Morgan Stanley spokesman said. Merrill Lynch has also made a proposal to the Indonesian government on ways to address the crisis, said a Merrill Lynch official. The proposals come as the Indonesian government seeks ways to meet the US$65 billion (S$113.8 billion) in short-term foreign debt that has crippled corporate Indonesia, sent the rupiah plunging almost 60 per cent this year and left the banking system paralysed as companies are unable to pay their debts and foreign banks have stopped lending. "I think this is one of many ways the Indonesian government will look at to bail themselves out of the crisis," said Peter Arkell at Kleinwort Benson in Jakarta. "If it's packaged right, and investors buy it, then the rupiah falls back, and that gives the companies some breathing room." Morgan Stanley denied reports it had made a "specific proposal" that the Indonesian government issue US$10 billion in government-backed debt that would help ease the short-term foreign debt crisis. It said it would work with the government to craft a debt relief package. "These discussions, while they do relate to financing alternatives in general, have not included a specific proposal for a $10 billion sovereign bond deal," the spokesman said. "We will endeavour to assist them in any way that we can." The Morgan and Merrill proposals are two of many that are circulating around Jakarta and the region as banks and the government attempt to craft a solution. ABN-Amro Holding NV of the Netherlands has also proposed a solution to the government, which would consist of creating a private debt clearing house to coordinate debt repayments and rescheduling. The investment banks are "trying to relieve some of the pressure on the balance of payments by rolling over the short-term debt", said Christa Marti at UBS in Singapore. Among other proposals, bankers said, were suggestions from the investment banks on how to strengthen the value the rupiah to between 5,500 rupiah and 6,500 rupiah to the dollar. At that level, some companies in Indonesia with foreign debt would be able to repay loans. Investors in Indonesia are watching South Korea, where government negotiators and international creditors were closing in on an agreement to exchange up to US$25 billion in bank loans for long-term bonds. -- Bloomberg