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New South Korean Finance Minister Highlights Asia Business News - 2002-04-15

South Korea has a new finance minister and Indonesia gets a break from international creditors.

South Korea says its economic reform plans will move forward unchanged under its new finance minister. South Korean President Kim Dae-jung has appointed presidential chief secretary Jeon Yun-churl to replace influential Finance Minister Jin Nyum. Mr. Jin resigned Saturday to run in an upcoming gubernatorial election.

Some of Indonesia's creditors have given the deeply indebted nation more time to pay-off its debts. A group of foreign governments and international institutions known as the Paris Club said Friday they have agreed to reschedule nearly $5.5 billion of debt, which was to come due in the next 21 months.

Under the deal, development loans will be repaid over the next two decades, while commercial debts will be due within 18 years. Unlike two prior rescheduling arrangements with the Paris Club, this one allows Indonesia to postpone interest payments as well as the principal.

Analysts say the new terms reflect confidence in Jakarta's economic reform agenda and a commitment to ensuring stability in the world's largest Islamic country.

Also in Indonesia, a large foreign telecoms operator is set to pull out of the country. AT&T Wireless will soon sell its 35-percent stake in a local fixed-line phone network for up to $350 million. The buyer, Telkom Indonesia, has confirmed that the deal is expected to take place.

The sale to Telkom Indonesia is viewed as a loss for the telecom sector, which badly needs foreign investment capital. However, it is seen as a triumph for Telkom Indonesia, which wants to consolidate its position at the dominant domestic fixed line operator ahead of the deregulation of the industry, slated for next year.

In Japan, media reports warn that the country's top financial watchdog could slap punitive measures against Mizuho Holdings, the world's biggest bank by assets. Massive computer failures marred its retail banking launch earlier this month. A computer system glitch halted its 7,000 automatic teller machines, disrupting at least 2.5 million transactions. It also erroneously reduced tens of thousands of account balances.

Akinobu Maeda, president of Mizuho Holdings, issued an apology, acknowledging the problems caused and the many complaints form customers. He says he will do his best to resolve the problem.

The government is likely to order the bank to improve its business practices and clarify management responsibilities.