Bank Ekspor to channel loans via other banks

JAKARTA (JP): The newly established state Bank Ekspor Indonesia (BEI), which will start operation on Sept.1, will channel its loans through appointed commercial banks, the bank's executive said here on Monday.

At the bank launch, BEI's president Bambang Hendrajatin told the media that the new bank, founded by the government especially to assist export-oriented companies, would allocate around US$100 million in loans a month.

He guaranteed that all exporters of any industrial sector would be able to get access to the bank's financing facilities even though the loans would be extended through appointed banks.

He said BEI's financial schemes would include a guarantee on letter of credits issued to finance imports of local exporters, in addition to import refinancing and working capital loans and exporters' bill of exchanges.

Bambang said that loan interest rates offered by the bank would be lower than commercial rates despite the use of an intermediary in the loan extension.

"It's the government's policy not to allow us to extend the funds directly to exporters. But we guarantee that the funds will reach exporters without unnecessary delay and at a reasonable cost," he said.

BEI, which was established by the government in May, will operate with a paid-up capital fund of Rp 3 trillion (about $400 million at current rate) allocated from the state budget.

The government initially planned to transform Bank PDFCI, one of the private banks nationalized last year, into an export financing agency. However, the plan was canceled as the government considered the establishment of a new bank as more effective.

Unlike a conventional bank, BEI will not raise funds from the public to finance its activities, but will obtain the funds from bilateral and multilateral foreign financial institutions. These include the Japan Export Import Bank, the World Bank and the Asian Development Bank.

BEI's director Budi Mulya said the government had secured $1 billion in standby loans from the Japan Export Import Bank to finance BEI's operations.

"We believe many exporters will benefit from the BEI financing facilities. We predict that in one year after commencing operation, BEI will be able spend up to 80 percent of the entire Japan Export Import Bank's facility," he said.

Exporters, however, expressed their skepticism over the way the bank would channel its lending, arguing that the indirect financing would make loan distribution more complicated and costly.

Joy Martua Pardede, head of the trade department of the Indonesian Chamber of Commerce and Industry (Kadin), said the operation of the bank would not really solve exporters' problems if the bank provided its financing facilities through other banks.

"What is really needed is a direct loan system to increase working capital, not refinancing loans through a third party bank," he said.

Irwandy Muslim Amin, the secretary-general of the Indonesian Textile Association, said the indirect lending policy would not help exporters and could instead be exploited by the third party bank as an excuse to increase costs and interest rates.

"It's useless. It's been proven for years that the existence of a third party in the indirect lending method will only ruin the export schemes," he said. (cst)