Exporters to get better deal<\/p>\n
JAKARTA (JP): Bank Indonesia (the central bank), in another
\nbid to boost non-oil exports, has decided to extend its
\nrediscount facilities to suppliers of export-related products and
\ncut the discount rate on usance export drafts by one percentage
\npoint.<\/p>\n
The central bank's managing director, Paul Sutopo
\nTjokronegoro, said yesterday that only those companies supplying
\ngoods to exporters were entitled to rediscount facilities, which
\nexporters already received.<\/p>\n
\"With these facilities, we try to encourage suppliers and
\nexporters alike to boost their business and thus improve the
\ncountry's non-oil exports,\" Paul told journalists at his office.<\/p>\n
As part of the government's deregulation package announced on
\nJune 4, 1996, the central bank provides a more favorable interest
\nrate on rediscount facilities to exporters of textiles and
\ntextile-related products, shoes, electronics, timber and rattan
\nproducts and leather goods.<\/p>\n
Paul said the Ministry of Industry and Trade had listed 284
\nexporters which were eligible for the central bank's rediscount
\nfacilities. They include 184 exporters of textiles and textile-
\nrelated products, 39 exporters of footwear and 31 exporters of
\ntimber products.<\/p>\n
According to the central bank's ruling No. 29\/151\/KEP\/DIR,
\ndated Dec. 31, 1996 and effective next month, exporters may sell
\ntheir export proceeds to Bank Indonesia through foreign exchange
\nbanks.<\/p>\n
Export proceeds can be in the form of a sight draft or usance
\ndraft issued on the basis of an irrevocable bankers' letter of
\ncredit.<\/p>\n
Bank Indonesia will rediscount usance export drafts with a
\nremaining maturity period of between 30 days (one month) and 720
\ndays (two years).<\/p>\n
Bank Indonesia accepts five currencies for rediscount. Its
\nrates are floating, using Singapore Inter-bank Offered Rates
\n(SIBOR) as a reference.<\/p>\n
The discount rate for special exporters is now SIBOR. It was
\nSIBOR plus one point. The new rate for general exporters is SIBOR
\nplus one point, down from SIBOR plus two.<\/p>\n
Paul said that cutting the discount rate to the level of SIBOR
\naimed to maintain the facilities' attractiveness for exporters.<\/p>\n
\"Our rediscount facilities, introduced in June last year, have
\ninfluenced banks to lower inter-bank discount rates on usance
\nexport drafts. Therefore, it is normal for us to adjust our
\ndiscount rate,\" Paul said.<\/p>\n
The five currencies are U.S. dollars, Japanese yen, Deutsche
\nMarks, Netherlands gilders and British pounds. Export proceeds in
\nother currencies can be sold to Bank Indonesia after being
\nconverted into U.S. dollars.<\/p>\n
Bank Indonesia normally rediscounts export drafts in rupiah.
\nHowever, the new ruling allows banks, which issue export drafts
\ndenominated in U.S. dollars, to ask the central bank to pay them
\nin U.S. dollars.<\/p>\n
\"We will pay them in U.S. dollars provided that we have enough
\nreserves of U.S. dollars,\" Paul said, adding that the central
\nbank's reserves now stood at US$19.1 billion.<\/p>\n
Paul warned that the central bank would punish any bank which
\napplied for the rediscount facilities illegally. In the early
\n1990s, a noted businessman secured rediscount facilities for
\nfictitious exports.<\/p>\n
Another central bank ruling issued by the central bank on Dec.
\n31, 1996, stipulates that the rediscount facility for special
\nsuppliers must be based on local letters of credit opened by
\nexporters based on irrevocable bankers' letters of credit.<\/p>\n
Based on the local letters of credit, suppliers ask their
\nbanks to issue bank drafts and sell them to Bank Indonesia. The
\ncentral bank will only rediscount bank drafts issued by sound
\nbanks. And their remaining maturity period should be between 30
\nand 90 days.<\/p>\n
The rates for bank drafts are based on the central bank's
\nthree-month money market securities' cut-off-rate plus or minus a
\nset margin. The margin is now minus 0.50 percent.<\/p>\n
Bank Indonesia has also issued a ruling on domestic letters of
\ncredit by local banks.<\/p>\n
Paul said the new ruling on local letters of credit aimed to
\nimprove the local payments system and encourage the trade of
\nlocal letters of credit in a secondary market.<\/p>\n
\"A liquid secondary market for local letters of credit will
\nbenefit the monetary authority in terms of managing the money
\nsupply, banks in terms of managing their liquidity and businesses
\nin general,\" Paul said. (rid)<\/p>",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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