Friday, August 25, 2006

SOE's bad loans could be written off 100%

Supreme Court had approved the separation of state assets and state-owned enterprises assets, government officers claimed. This would pave the way for SOE banks to write off up to 100% bad loans owed by SOEs, but only 5% write off for private companies.

Secretary to MSOE Muhammad Said Didu, as quoted by, said with the Supreme Court's decision, there would be no more excuses for SOE banks than to compete with private-owned banks.
"Let's say that SOEs bad loans could get write off up to 100%, but those of private companies up to 5% only," he said.
So, there will be different settlement for PT Garuda Indonesia (SOE) and PT Argo Pantes Tbk (listed-private company), both with bad loans at state-owned PT Bank Mandiri Tbk. Mandiri's bad loans reached Rp25.9 trillion (almost US$2.8 billion). Another state-owned bank PT BNI Tbk recorded Rp10.04 trillion (US$1.1 billion) bad loans.
What people need to watch is the implementation of this policy, especially to minimize moral hazard at state-owned banks.

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