BEI channels $5 million in first export credits

JAKARTA (JP): Newly established Bank Expor Indonesia (BEI) has channeled a total of US$5 million in export credits since it began operations on Sept. 1, a bank official said here on Thursday.

Speaking during a break in the 1999 Export Forum here, BEI director Budi Mulya said the credits were channeled to four export-oriented companies through a third-party bank.

"We channeled the money to the four companies through Bank CIC," Budi said. Bank CIC is Bank Century Intervest Corporation

He said BEI expected to gradually increase its export credit financing to $70 million per month.

BEI was established in May with paid-up capital of Rp 3 trillion (about $425 million at the current exchange rate) to help finance the import of raw materials for export-oriented company.

Several exporters expressed skepticism earlier this month about the benefits of BEI, saying that providing funds through third-party banks would only increase the costs of loans.

Budi defended the two-step lending process, but conceded that channeling export credits through third-party banks marginally raised the cost of the loans.

He said as a new bank, BEI still lacked the facilities and personnel to provide the credits directly to exporters.

Budi estimated some 22 banks had agreed to cooperate with BEI in channeling funds to exporters.

"We've discussed our idea with the banks' management, but we haven't yet detailed the cooperation on a operational level," he said.

Without naming particular banks, he said state banks may soon begin channeling BEI loans.

Budi also said BEI planned to become a direct funding bank, but he declined to say when this would occur.

"We've already forwarded the legal aspects of the plan to the government, but we're still waiting for the new government to be formed," Budi said.

Responding to criticism of the high margin BEI has set on its loans, Budi said that as a company accountable to its shareholders it must obtain a good rate of return on assets (ROA).

"In setting the margin we refer to three factors: proficiency, ROA and overhead costs," he said, adding that the bank's rates are still competitive in the market.

Aside from having received funds from the government, the bank is also expected to obtain some $1 billion from the Japan Export Import Bank.

"The funds have been on standby for a year now and we expect they will soon be available to us," he said.

The bank's office is located in Tower II of the Bursa Efek Jakarta Building on Jl. Sudirman in Central Jakarta and currently employees 70 people.

In its company profile, BEI describes itself as a nondirect lending and noncompetitive bank.

Working capital credits and export credits are channeled through appointed banks, which bear all the risks.

Budi said BEI also provided loans under cofinancing schemes with other commercial banks.

The 1999 Export Forum was held on Thursday in conjunction with the 14th National Merchandise and Commodity Show at the Jakarta Fair Grounds in North Jakarta, which opened last Wednesday.

The five day show, with the theme Resource Indonesia '99, includes exhibits of textile products, chemicals, plastic goods, cosmetics, handicrafts and agricultural products.(03)