Singapore bankers cool on USDA plan<\/p>\n
SINGAPORE (Reuters): Singapore bankers reacted coolly to a
\nU.S. Agriculture Department (USDA) plan to let banks in Singapore
\nparticipate in a U.S. farm export loan guarantee program for
\nIndonesia.<\/p>\n
In a move to help U.S. farm exports, USDA said last week it
\nwould allow banks in Singapore to participate in a program to
\noffer loan guarantees for U.S. farm exports to Indonesia.<\/p>\n
\"The idea is not bad, if things are operating normally. But
\nthe condition is not normal in Indonesia. The risk is just too
\nhigh,\" said a Singapore-based executive at a U.S. bank.<\/p>\n
He was attending a seminar organized by U.S. Agriculture Trade
\nOffice in Singapore on the USDA plan.<\/p>\n
USDA has allocated $400 million in GSM-102 loan guarantees to
\nhelp the financially-struggling nation buy U.S. farm goods in
\nfiscal 1998, which began October 1.<\/p>\n
Indonesia is a leading Asian grain buyer but industry sources
\nhave estimated its soymeal and corn imports in 1998 will crumble
\nowing to its worst economic crisis in decades.<\/p>\n
Wheat imports could drop by as much as 20 percent despite
\nrising consumption, they said.<\/p>\n
As of Feb. 27, Indonesia had used only $31.4 million of the
\nU.S. loan guarantees -- to buy $24.1 million of oilseeds, $7.1
\nmillion of cotton and $200,000 worth of corn products.<\/p>\n
\"The United States is shifting some of its risk in Indonesia
\nto Singapore,\" said one banker at the seminar.<\/p>\n
Washington does not want to lose Indonesia during stiff
\ncompetition with South American countries like Argentina and
\nBrazil in the commodities industry, the banker said.<\/p>\n
\"We are trying to maintain our market share,\" Lawrence
\nMcElvain, a director of USDA's Export Credits, told dozens of
\nbankers at the seminar.<\/p>\n
Despite the financial instability in Indonesia, \"we are
\nprepared to take the risk,\" McElvain said.<\/p>\n
The GSM-102 loan guarantee program will cover all agricultural
\ncommodities and approval will be granted within 24 hours if all
\nnecessary documents are provided, he added.<\/p>\n
Singapore also supported a multilateral system of guarantees
\nof Letters of Credit (LCs) for Indonesia to enable the country to
\nimport goods vital for its export trade.<\/p>\n
Singapore Prime Minister Goh Chok Tong proposed the LCs system
\nto Indonesian President Soeharto in February.<\/p>\n
But many bankers here were apparently unwilling to participate
\nin the USDA program.<\/p>\n
\"Singapore government has its concerns as it has huge
\ninvestment in Indonesia. If the situation in Indonesia keeps
\nworsening, it won't do Singapore any good,\" one banker said of
\nSingapore's support for LCs.<\/p>\n
\"But at the moment even one percent of risk is a big deal for
\nany bank in Asia,\" the banker said.<\/p>\n
\"The main problem is they don't have cash so who can guarantee
\nthem?\" he added.<\/p>\n
The International Fund Management's (IMF) postponement of a $3
\nbillion bail-out payment to Jakarta over the weekend cast more
\nshadows on the USDA program, trade sources and bankers said.<\/p>\n
\"I can't imagine what will happen to Indonesia if they can't
\nget the money from IMF or foreign banks. They've already cut down
\nimports tremendously,\" said one grain trader at a U.S. commodity
\nhouse in Singapore.<\/p>\n
Even after Indonesia's key election this week, most banks are
\nlikely to maintain a wait-and-see attitude, they said.<\/p>\n
\"Anything can change any minute in Indonesia, but shipments
\nfrom the United States will take three weeks to arrive. Who wants
\nto take this kind of risk?\" said one banker at a Europe-based
\nbank.<\/p>",
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"sponsor_url": "https:\/\/okusiassociates.com"
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