Production capacities may hit 90% next year<\/p>\n
JAKARTA (JP): The country's manufacturing sector has shown
\npromising signs of recovery lately with a significant increase in
\nthe level of production being recorded.<\/p>\n
Coordinating Minister for the Economy Rizal Ramli said here on
\nTuesday that the production capacity of existing companies was
\nbeing 70 percent utilized at present compared to about only 40
\npercent three months ago. This was due to increases in demand
\nboth from the local and overseas markets, he explained.<\/p>\n
Additional surges in demand over the next few months were
\nexpected to further raise the utilization level of current
\ninstalled capacity to between 80 percent and 90 percent.<\/p>\n
\"Once we reach full production capacity, foreign investors
\nwill enter. So investment will come in by itself,\" he was quoted
\nas saying by the Antara news agency during a seminar on
\nIndonesia's economic outlook for next year, which was organized
\nby the Econit Advisory Group.<\/p>\n
The minister also expressed optimism that the government could
\nimprove economic stability by reducing its dependence on
\nborrowings.<\/p>\n
Accordingly, the government would reduce the current 4.8
\npercent budget deficit next year, Rizal said.<\/p>\n
Meanwhile, government projects in the upcoming state budget,
\nhe said, were largely targeted at the development of rural
\ninfrastructure.<\/p>\n
Rizal had said earlier that Indonesia would finance
\ninfrastructure development using loans from the World Bank's
\nInternational Development Assistance (IDA) scheme.<\/p>\n
The IDA loans, he said, carried interest rates of almost zero
\npercent over a 30-year repayment period.<\/p>\n
IDA provides aid for very poor countries only and Indonesia
\nhad once been crossed off its list after the oil boom of the
\nearly eighties.<\/p>\n
Rizal also said that he hoped to obtain $500 million next year
\nthrough the securitization of natural gas sales to Singapore.<\/p>\n
Securitization is the conversion of assets or bank loans into
\nmarketable securities, such as Floating Rate Notes or
\nEurocommerical papers.<\/p>\n
State-owned oil and gas company Pertamina has entered into an
\ninitial agreement with Singaporean firm Gas Supply Pte Ltd for
\nthe supply of natural gas from Sumatra to Singapore.<\/p>\n
The deal is expected to generate income in excess of $7
\nbillion over the 20-year span of the contract.<\/p>\n
The government, Rizal added, would then sign a securitization
\ndeal with Singapore. A securitization deal with Singapore would
\nhelp convince investors to buy the securities.<\/p>\n
According to him, the securitization of gas sales could
\nfurther improve Indonesia's credit rating from negative to AA+ at
\nleast.<\/p>\n
Rizal did not elaborate further on the plan.<\/p>\n
In September, he said that the government would issue
\ninternational bonds with the backing of the International Finance
\nCorporation (IFC), a financial arm of the World Bank.<\/p>\n
But the IFC later denied having made an initial agreement to
\nguarantee Indonesia's international bonds.<\/p>\n
If the government realizes the plan for the new international
\nbond issue, it would be the first since the country was hit by
\nthe financial crisis in 1997.<\/p>\n
Rizal also admitted that the government's privatization
\nprogram was proceeding too slowly and that it might drag on into
\nnext year.<\/p>\n
The government, he said, also had plans to divest its stake in
\nthe country's largest bank, the state-owned Bank Mandiri by the
\nend of next year.(bkm\/rei)<\/p>",
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"sponsor": "Okusi Associates",
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