BEI to issue Rp 500b of bonds

Leony Aurora, The Jakarta Post, Jakarta

State-owned Bank Ekspor Indonesia (BEI) will issue Rp 500 billion (US$ 54.74 million) of bonds in the second quarter of this year, says a top executive.

The proceeds of the rupiah-denominated bond sales would be used to cover some Rp 300 billion worth of mid-term notes, which are set to mature in July, the bank's managing director E Firmansyah told reporters on the sidelines of a meeting of the executives of state-owned enterprises (SOEs) here on Tuesday.

"The rest will be used for our working capital," he said.

Greater working capital would bode well for the company's plan to increase lending to 8 percent this year. In 2004, it lent out nearly Rp 6 trillion, mostly for resource-based exports.

In the first nine months of 2004, BEI reported an unaudited net profit of Rp 127 billion. Its assets stand at about Rp 7.4 trillion.

Firmansyah also said the bank was moving forward with its plans to convert itself into an export credit agency (ECA), which the country does not have at present.

"We plan (to complete the change) in three years," he said.

The conversion to ECA is in line with the bank's vision set when it was established.

"At that time, we did not have the law to support it," said Firmansyah.

The plan had been presented to the central bank and basically approved, he said. "They (the central bank's executives) said that we needed an ECA to increase exports and foreign reserves."

To develop the agency, BEI has to wait for the Ministry of Finance to draft a law as its umbrella and then the House of Representatives must pass it.

"There was a draft previously, but it may still require several adjustments," said Firmansyah.

By being an ECA, it expects to be able to focus more on providing export credit facilities, thus easing competition from other banks.

It aims to expand export credit between 10 percent and 15 percent per year.