1. Delays Mount in Indonesia Vote Count 2. Astra Deal Is Sign of Revival in Indonesia June 27, 1999 Delays Mount in Indonesia Vote Count By SETH MYDANS JAKARTA, Indonesia -- When former President Jimmy Carter came to observe Indonesia's general election nearly three weeks ago, he called it "the most complex electoral system" he had ever seen. And that was only the start of it. Since Election Day on June 7, the counting of the 112 million votes has slowed to a near halt, bogged down in a morass of apparently unforeseen difficulties. A new, much extended deadline of July 8 for the final result is described by some experts as desperately over optimistic. Remarkably, voters have not exploded in frustration. Thorough news coverage, generally restrained political parties and a daily avalanche of partial results seem to have helped keep the balance. "People still see the process, despite its flaws, as essentially honest," a Western diplomat said. And anyway, said Smita Notosusanto, who heads an electoral monitoring group called Unfrel, "People already know what the result is going to be. PDI is the winner and Golkar is the runner-up." She was referring to the projected results for the Indonesian Democratic Party for Struggle, headed by Megawati Sukarnoputri, and the incumbent party of President B.J. Habibie. Press coverage has also made it clear to the voters that these electoral results --in the complex system to which Carter referred -- are just the first of several steps in choosing a new president later this year. Voters cast ballots for just 462 seats in a partly appointed 700-member electoral assembly where power will ultimately be determined by a combination of coalition-building and bare-knuckle politics. Having cast their ballots, Indonesians are now simply spectators as the vote is counted and as the process then moves through its complex stages -- the convening of regional parliaments, then the national Parliament, then the electoral assembly and finally the all-important choice of president. But although Carter and others could see these complications coming, few people imagined the tangle that the vote tabulators have gotten themselves into. Some officials had confidently predicted that a semiofficial "quick count," which has so far tallied fewer than 80 percent of the votes, would be completed within 24 hours. An "official count" based on returns from the 27 provinces formed by Indonesia's 13,000 islands had been delayed until this week, and then delayed again by political infighting. The explanations for the delays would seem to test credibility, but both foreign and Indonesian electoral analysts generally accept them. Broadly, officials say, Indonesia has not had a free election since 1955, and the new process is hobbled by inexperience, incompetence and a flurry of mostly minor protests. There are a host of other problems: Vote tabulators who feel they have not been paid enough refuse to forward their results. New computers are used to send results by e-mail but the files cannot be read by the system used in Jakarta. A herd of elephants terrorizes a convoy of ox carts delivering ballot boxes in Lampung province, forcing it to spend a night in the jungle. Sticklers are also causing problems, election officials and outside analysts said. "One problem is the fastidiousness of election authorities, who do not want the parties to come back and complain," a foreign election expert said, "and so they dot every 'i' and cross every 't."' In one example, there seems to be an overly rigid observance of a requirement that all poll watchers from the 48 contesting parties sign off on local results. In many cases, the delays have meant that these people are no longer available. In others, members of small parties that were shut out in the vote are refusing to endorse it. "Quite a number of small parties feel very, very disillusioned as a result of the outcome," said the election expert, who like all foreigners monitoring this sensitive election spoke on condition of anonymity. In addition, a foreign expert said, election authorities appear confused and slow in responding to thousands of protests, generally involving allegations of local vote-buying and intimidation rather than any systematic campaign to steal the election. "Probably what is happening is that the count is being put on hold pending those decisions," this expert said. "And consequently you see things now in a state of suspended animation." But the real power blocs, the half-dozen leading parties, have been busy. Already, the next stage of the electoral process is in full swing, with secret meetings and enigmatic public statements. "Behind the scenes, the ritual mating dance is under way as the bigger parties work on putting together some kind of understanding," the Western diplomat said. Once the final count is in, hard-nosed coalition-building can take place. June 26, 1999 Astra Deal Is Sign of Revival in Indonesia By WAYNE ARNOLD JAKARTA, Indonesia -- In the financial subplot of Indonesia's political transformation, few events have demonstrated the progress and pitfalls as clearly as the agreement this week between PT Astra International and its creditors on how the company will pay back more than $1 billion in debt. Astra is a $1.7 billion company with interests from palm oil to Nike shoes. It is best known, however, for assembling the Toyota utility vehicles and Honda motorcycles that choke this city's streets as well as for its ties to the business empire of former President Suharto's family and friends. After 11 months of negotiations, Astra held a signing ceremony and banquet Wednesday to commemorate the deal. Coming as it did in a week of quickening signs that Indonesia's prospects are improving, the ceremony was heralded as a turning point for both the company and the nation's economy. "Now we can say, not only is the light at the end of the tunnel, but we've reached the end of the tunnel -- and the light," said Sri Mulyani Indrawati, director of the University of Indonesia's Institute of Social and Economic Research, speaking before the bankers, shareholders and company executives on hand at the $165-a-night Shangri-La Hotel. Interest rates are falling, inflation appears in check and stocks as well as the Indonesian currency have risen to levels not seen since the early days of the crisis. With economists predicting companies here will soon see profits again, officials hope Astra's achievement will prompt other companies to cut deals on the roughly $70 billion they owe foreigners. Indonesia is by no means out of the dark. That point is perhaps best illustrated by the identity of Astra's controlling shareholder, and its largest creditor: the government agency created to rescue Indonesia's banks. Even as the votes are counted to determine Indonesia's first freely elected leaders in 40 years, therefore, the new government is already burdened with the task of raising the estimated $60 billion needed to create healthy lenders. "It's a trade-off," said Sudarshan Gooptu, a World Bank economist. "There is a constituency out there saying they'd like more money to go into direct poverty alleviation. But if you want the economy to grow again, the banking system has to recover." Corporate debt restructuring is a prerequisite to that recovery. If Astra's deal is any indication, further agreements may have less to do with renewed confidence among lenders than with their own pessimism about recovering their debts. "There is no legal framework and companies don't want to negotiate with banks," said Koji Yamashita, head of international credit at the Long-Term Credit Bank of Japan. The bank is trying to recover its roughly $700 million share of the money Indonesian companies owe foreign banks before winding up its foreign operations as part of its own takeover by Japan's government. Japan's own financial problems have made Japanese lenders reluctant to compromise with lenders if it means adding losses to their already fragile balance sheets. Representatives of the International Monetary Fund, which is leading a $43 billion rescue package for Indonesia, this week noted Indonesia's progress, but said the government needed to lower interest rates further, increase spending and accelerate financial reforms. Indonesia's Bank Restructuring Agency made some progress this week by securing pledges from 173 of the nation's 200 largest corporate debtors to repay their loans. Earlier this month, the agency publicized a list of those borrowers. The finance minister subsequently threatened to name owners of the companies that do not cooperate, but their identities were already well-known: the list included several companies with Suharto links. No. 21 on the list, for example, is PT Nusantara Ampera Bakti, or Nusamba, a conglomerate created by three Suharto foundations, one of Suharto's sons and his longtime golfing buddy and business associate, Mohammad "Bob" Hasan. Hasan was Astra's chairman until he resigned a year ago. Nusamba is also Astra's second-largest shareholder, which partly explains why the bank restructuring agency now controls Astra. Astra's trouble with bankers began last August, when it told them it wanted to restructure loan payments. It hired Chase Manhattan Corp. and Sakura Bank Ltd. to advise how to negotiate with more than 100 creditors, bankers and bondholders -- and in October stopped making interest payments. Bankers then warned that they would not even discuss restructuring, but in November, Astra went ahead and appointed a restructuring committee from among its largest lenders. Then it devised a restructuring plan of its own and made an offer: Discuss the plan or take 30 cents on the dollar and walk away -- a "haircut," as a loan write-off is known in banking parlance. Bankers balked. Astra officials say Japanese bankers, Indonesia's largest foreign lenders, were especially loath to deal. "If we took a haircut on Astra, everyone would want us to take a haircut," said Shingo Ota, head of corporate banking in Singapore for the Industrial Bank of Japan Ltd., Astra's largest foreign lender. For three months, Astra and its advisers made weekly trips to Singapore for talks with the committee that bore an almost comic "we can't pay the rent, you must pay the rent" monotony. "It was tiring," said Edianto Prasetyo, senior manager of Astra's banking relations department. The impasse was only broken when Astra offered a new plan that included paying the interest it had missed and accelerating repayment of the principal. By May, creditors had approved the plan, and after a month to do paperwork, Astra and its lenders were breaking bread together at the Shangri-La.
