Export financing agency to be legalized<\/p>\n
JAKARTA (JP): The government is to issue a government
\nregulation by April as a basis for creating an export financing
\nagency, the central bank's director Dono Iskandar said on Monday.<\/p>\n
Dono, also the chairman of the government committee for the
\ncreation of such an agency, said here that it would have paid-up
\ncapital of US$150 million.<\/p>\n
He said funding for the agency may come from both bilateral
\nand multilateral foreign financial institutions such as the Japan
\nExport Import Bank, the World Bank and Asian Development Bank.<\/p>\n
\"We have secured US$1 billion in standing loans from the Japan
\nExport Import Bank. In the first stage, our export financing
\nagency may only need $200 to $300 million,\" Dono said on the
\nsidelines of the national meeting of the Indonesian Exporters
\nAssociation.<\/p>\n
Dono confirmed that the agency would be a new institution and
\nthat the government would not transform any existing bank into an
\nexport financing agency as was initially planned.<\/p>\n
The government planned in January to convert Bank PDFCI, one
\nof the private banks nationalized last year, into an agency of
\nthis kind. It then canceled the plan, saying that establishing a
\nnew entity would be more favorable.<\/p>\n
Dono said the new agency would only provide financial
\nassistance to exporters who had suffered greatly from the
\ncollapse of the local banking industry.<\/p>\n
Because of the currently low international confidence in the
\nlocal banking system, letters of credit issued by local banks
\nwere often rejected by their foreign counterparts.<\/p>\n
The government then extended a helping hand by guaranteeing
\nall letters of credit issued by appointed local banks. But still
\nexporters have had to deposit all the money needed before they
\ncould open letters of credit at these local banks.<\/p>\n
\"The agency will help finance the exporters in opening up
\nletters of credit to import raw materials and also in boosting
\ntheir working capital.\"<\/p>\n
The chairman of the Indonesian Chamber of Commerce and
\nIndustry, Aburizal Bakrie, said he hoped the agency would be
\nbrought to life soon in order to boost exports.<\/p>\n
\"Export credits should have a longer maturity because our
\ncompetitors have export financing for up to 10 years. We have
\nonly 12 months maturity, and even that it is scarce.\"<\/p>\n
Such an export financing agency would also break the current
\nvicious circle in the Indonesian banking system, which was
\nalready being kept in limbo by high interest rates and a legal
\nlending limit.<\/p>\n
Many local banks are not able to disburse various trade
\nfacilities provided by foreign donors through the central bank
\nbecause of the legal lending limit as most of them had previously
\nbroken the rules, Aburizal said.<\/p>\n
The agency should also help to revive business activities in
\nthe real sector, which has already been seriously affected by the
\ncollapse of the banking sector.<\/p>\n
Separately, the exporters association secretary-general Toto
\nDirgantoro said many of the association's members have complained
\nthat they were still burdened by a monthly fee of Rp 100,000
\n(US$11) payable to the Indonesian Importers Association (GINSI)
\nin order to get its recommendation to import raw materials.<\/p>\n
\"In the past, we paid GINSI a monthly fee in order to get
\ntheir recommendation so that we could obtain clearance for our
\nimported goods from the customs area. Now, this should be
\nabolished,\" he said.<\/p>\n
This requirement was actually revoked in 1998 by then Director
\nGeneral of Customs and Excise Martiono Hadianto, Toto said. (02)<\/p>",
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