Exporters hail plan to set up trade financing agency<\/p>\n
JAKARTA (JP): Exporters hailed on Saturday the government's
\nplan to establish a financing agency whose immediate focus will
\nbe to provide them with subsidized preshipment working capital
\nand export credit, as a breakthrough in overcoming the export
\nfinancing bottleneck.<\/p>\n
Irwandy Muslim Amin, general secretary of the Indonesian
\nTextile Association, said on Saturday that the new plan would
\nprovide exporters with a clear and workable credit scheme for the
\npurchase of imported raw materials.<\/p>\n
\"This is good. It's a move we've been insisting on,\" he told
\nThe Jakarta Post on Saturday.<\/p>\n
Textiles are one of the country's major non-oil and gas export
\nearners.<\/p>\n
Minister of Trade and Industry Rahardi Ramelan disclosed the
\nplan to the press on Friday, but it will not be formally
\nannounced until later this week.<\/p>\n
He said that the new agency would be established by converting
\none of the banks currently under the control of the Indonesian
\nBank Restructuring Agency. The appointed bank will take over all
\nexisting export financing schemes after its bad assets and
\nliabilities have been cleared.<\/p>\n
He said that the agency would provide guaranteed short-term
\nexport financing and export insurance, as well as operating as an
\nexport information data center.<\/p>\n
Local exporters have been confronted with serious difficulties
\nin obtaining necessary imported raw materials, particularly
\nduring the first half of this year, due to overseas banks'
\nrejections of the letters of credit (L\/Cs) they opened at local
\nbanks.<\/p>\n
Although the government later received export financing
\ncredits from international financial institutions guaranteeing
\nlocal L\/Cs, the exporters continued to have difficulties, as
\nlocal banks were reluctant to open L\/Cs for them.<\/p>\n
Local banks feared that the L\/Cs would turn bad, adding
\nfurther difficulties in meeting the strict government requirement
\nof a minimum of 4 percent capital adequacy ratio by the end of
\nthis year.<\/p>\n
The Ministry of Trade and Industry said in a report that only
\nUS$618 million out of the $5.6 billion provided by Bank Indonesia
\nand foreign institutions for the export financing scheme had been
\nused by local banks as of the end of October.<\/p>\n
Irwandy agreed, estimating that less than 2 percent of the
\nexport credit guarantees provided by Bank Indonesia had been
\nutilized, because the local banks appointed to run the scheme
\ndemanded various unreasonable requirements, particularly the need
\nto provide a 100 percent deposit margin for the L\/C.<\/p>\n
\"We had 28 meetings with various ministries, government
\ninstitutions and participating banks to sort out the problems,
\nbut ended up with no results,\" he added.<\/p>\n
He explained that with a single financing agency, exporters
\nwould no longer have to face a \"ping-pong\" treatment, like in the
\npast when exporters had to go back and forth between various
\nbodies involved in the financing schemes.<\/p>\n
He also expected that the agency would not demand unreasonable
\nrequirements for the financing facility.<\/p>\n
Irwandy was also optimistic that the new agency would help
\nexporters maximize export revenue, as they would no longer have
\nto provide massive discounts to the foreign buyers who had been
\nproviding the raw materials during the domestic financing
\nbottleneck.<\/p>\n
The chairman of the Indonesian Handicraft Exporters
\nAssociation, Rudy Lengkong, also welcomed the plan.<\/p>\n
\"This is what we've been waiting for, especially as the agency
\nwill be run by a privately-owned bank. This will help to boost
\nour exports,\" he said.<\/p>\n
\"State banks are not efficient because they're too
\nbureaucratic,\" he added.<\/p>\n
He stressed, however, that the government had to make sure
\nthat the financing facility would focus on export oriented
\nbusinesses, and not on other sectors like the real estate
\nindustry.<\/p>\n
\"I also expect this facility to be enjoyed by small and
\nmedium-sized exporters,\" said the chairman of the 3,000-strong
\nmembership association, which has a combined annual export value
\nof around $2.5 billion.<\/p>\n
He said that in order for the new agency to effectively boost
\nexports, promotional agencies abroad had to be reopened.<\/p>\n
The government closed down the state-sponsored export agencies
\ndue to financing difficulties.<\/p>\n
\"We have to find ways to reopen the agencies because
\npromotional activities are essential in helping to boost
\nexports,\" said the former chairman of the National Export
\nPromotion Agency.<\/p>\n
\"Thailand has been aggressive in making promotions abroad,\" he
\nadded. (rei)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/exporters-hail-plan-to-set-up-trade-financing-agency-1447893297",
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