Austrian bank hails RI's stability

Austrian bank hails RI's stability

SINGAPORE: An Austrian bank which extended a US$21 million loan to United
Fiber System (UFS) to develop a mill in Indonesia cited the
country's growing political stability as the deciding factor, the
chief executive officer said in published remarks on Monday.

Analysts have expressed doubts the plans will take off.

Rainer Silhavy, head of Raiffeisen Zentralbank Osterreich's
(RZB) Singapore branch, told The Straits Times the project
involving a woodchip mill in Kalimantan had been under study for
more than a year.

"But a real positive thing happened over the last six months
when the improvement in the political situation in Indonesia
convinced us to participate," he was quoted as saying.

The current Indonesian government is very interested in
attracting direct foreign investments, Silhavy noted. "Now we can
say that we have partners in Indonesia that we can rely on".

The bank is not overly concerned over a legal dispute centered
on UFS' forest concession rights in Indonesia, confident that it
will be resolved in the company's favor, he added.

Brokerage firms in Singapore recently imposed trading curbs on
UFS shares after a sudden price surge because they were not
convinced about the company's fundamentals.

UFS chief executive Kishore Dass said recently he expects the
issue to be settled within the first quarter of this year.

UFS also plans to build a pulp mill in Kalimantan costing
$1 billion.

Silhavy defended the company's fundamentals and said the
projects make "commercial sense".

He told the newspaper the output from the woodchip mill would
be used as raw material for the pulp mill. The entire output from
the woodchip mill has guaranteed buyers, he added.

The mill is expected to start operations in the last quarter
of this year. -- DPA