Jenny Grant, Jakarta – Indonesia yesterday estimated the country's foreign debt at US$137.4 billion – higher than previous official figures – and announced it was drafting a new bankruptcy law to deal with the nation's private debt. "Companies not able to solve their debt problems... must have a legal solution. The government will produce as soon as possible a bankruptcy law," said the Council for Economic and Financial Resilience, set up to deal with the debt crisis.

The head of the seven-member council, Radius Prawiro, said that of the total foreign debt estimate, the private sector owed $73.9 billion and the government $63.5 billion. The council said the International Finance Corp and a number of other banks had provided 42 Indonesian companies with $1 billion in credit to help them pay off their loans. Publicly listed telecommunications company Telkom is the only state-owned company to receive finances from the corporation's package. The council said there would be no guarantee, bailout or government subsidy of any kind in assisting with privately held debt. "If the companies can do this themselves [pay off their debts], please do so," said Mr Prawiro earlier yesterday.

Developing a new bankruptcy law is part of the $43 billion rescue package agreed between Indonesia and the International Monetary Fund in October. Existing bankruptcy processes in Indonesia are time consuming and complex, leaving creditors empty handed after years of chasing bad debts. The lack of a clear bankruptcy law has further eroded investor confidence in recent months after the spiralling rupiah made many Indonesian companies technically bankrupt. A high level of hidden corporate loans and uncertainty over the national leadership succession have caused a total loss of confidence in the economy. Anthony Salim, whose family owns the giant Salim Group, said the solution to the debt problem would have to be positive for both sides to encourage foreign investors to return.