Wednesday, August 23, 2006

Mandiri-BNI bad loans settlement, long way to go

State-owned banks, especially PT Bank Mandiri Tbk and PT BNI Tbk, have to wait few more months to get a clearer picture of how to handle their huge bad loans. Why?

Minister for state-owned enterprise (MSOE) Sugiharto admitted yesterday that Supreme Court had returned the draft revision of regulation on non-performing loans (NPL) to the ministry for another review. He didn't disclose Supreme Court's respond. But Investor Daily quoted sources at Supreme Court saying it's up to the government to decide on what to do with the NPLs. So, back to square one.
Government, desperate to clean up the state bank's balance sheets from billions of bad loans, actually wanted to get legal clearance from Supreme Court on policies like haircut, write-offs, or bad loans offloading mechanism.
Sugiharto interprets the Supreme Court respond as a good one, just like what the government expect. The idea was to revise Govt Reg No. 14/2005 about Mechanism to Write-off State/Local administrations debts, especially erasing Article 19 and 20. Under the revised regulation, write-off or haircut should not conducted through Ministry of Finance but could be done by SOEs based on Limited Liability Law and SOE Law.
But the question, whether government or state-bank officials dare to make such decisions without have to worry the future prosecution/investigation under Anti-Corruption Law? Oops, most of them are ping-pong athletes!

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