Australian govt to underwrite exports to RI

Australian govt to underwrite exports to RI

CANBERRA (Reuters): Australian Prime Minister John Howard said
yesterday the government would underwrite Australian exports to
financially-troubled Indonesia, one of the country's major
trading partners.

"I've called this news conference this afternoon to announce
that the government has decided to provide assistance to
Australian exporters and therefore to support Australian jobs in
relation to Australia's export trade with Indonesia," Howard told
reporters.

Howard said there was no cap on the level of assistance
provided as it would be provided on a case-by-case basis.

It would also be conditional on a sovereign guarantee from
Indonesia, he said.

"We will provide, on the basis of a case-by-case analysis in
relation to the whole gamut of Australia's export trade with
Indonesia, short term credit insurance on a national interest
account for Australian exporters to Indonesia through EFIC (the
Export Finance Insurance Corp.)," Howard said.

Howard said Australia's export trade with Indonesia was worth
more than A$3 billion a year, and said the case-by-case basis
would ensure the support was properly targeted.

The decision to provide the assistance was also prompted by
aggressive moves by the U.S. to make inroads into Indonesia.

"At a time like this when our exporters are facing fierce,
even on occasions actively avaricious, competition from United
States exporters into Indonesia,...it is very important that my
government and that Australia stands up for the interests of
Australian exporters and therefore of Australian jobs," he said.

The Australian economy was holding up well despite the Asian
turmoil, with Howard saying he had no hard evidence that any jobs
had been lost due to the regional crisis.

Australia's cotton industry welcomed Wednesday's announcement
by the Australian government that it will provide export trade
assistance to cover trade to Indonesia.

This was a positive move to assist exporters in their fight to
retain a very important market, Cotton Australia chief executive
Gary Punch said in a statement.

He also said the industry was pleased that Howard had shown a
willingness to take a tough diplomatic stand with the U.S. over
its efforts to enter Indonesian markets.

In Singapore, a proposal for international guarantees to
support Indonesian letters of credit (LCs) to keep the country's
crisis-stricken trade going got a cautious welcome from financial
markets yesterday.

But the scheme would have to involve many countries and would
take time to be put together, economists said.

Singapore's Prime Minister Goh Chok Tong proposed on Tuesday a
system of multilateral guarantees for Indonesian LCs to enable
the country to import components vital for its export trade.

Speaking after meeting Indonesian President Soeharto, Goh said
LCs issued by Indonesian banks were having difficulty being
accepted and this might prevent firms getting components
essential for goods to be manufactured for export.

Indonesia's rupiah has lost some 75 percent of its value
against the U.S. dollar since July and made the country's
corporate debt, estimated at more than $60 billion, difficult to
repay. Many foreign banks feel overexposed to Indonesian debt.