BSM to help government boost trade with Iraq

JAKARTA (JP): Bank Syariah Mandiri (BSM) and the Indonesian Chamber of Commerce and Industry (KADIN) agreed here on Friday to help promote bilateral trade with Iraq.

The bank's president, Nurdin Hasibuan, said BSM, under the agreement, would provide export financing facilities to companies willing to sell their goods to the Middle East country.

"We are ready to help local exporters sell their products to Iraq," he said at a media conference.

As part of the United Nations-backed food-for-oil program to Iraq, Indonesia is entitled to sell US$500 million worth of food products and other merchandise to Iraq for every six months. In return, Iraq would pay Indonesia with crude oil, according to Nurdin.

Besides food, he said, there were also medicines, electronics and mining equipment that could be exported to Iraq by Indonesian exporters.

BSM, which is wholly owned by state Bank Mandiri, began operations late last year as the second Islamic bank in the country, and bases its activities on profit-sharing, not on interest payments as adopted by conventional banks.

Muchrim Hakim from KADIN said there were 120 companies on the list who were ready to join the food-for-oil program using BSM export financing facility.

"We will work on assisting all these companies so we can meet the $500 million portion given to Indonesia," he said.

Indonesia's exports to Iraq totaled $45.6 million in 1998, or less than one-hundredth percent of the country's total export figure, according official data.

Imports from Iraq to Indonesia amounted to $47,000 in 1998, a significant fall from $36 million the previous year.

BSM currently has about Rp 450 billion in total assets with a equity of Rp 350 billion, according to Nurdin.

The bank has so far collected Rp 10 billion of public deposit funds.

Nurdin said the bank had targeted to collect up to Rp 100 billion in deposit funds from the public during the year 2000.

BSM, before its transformation into a Syariah bank, was the commercial Bank Susila Bhakti, said Nurdin. (udi)