Bukopin, BMI to fund plantation businesses

JAKARTA (JP): Bank Bukopin and Bank Muamalat Indonesia have agreed to focus their lending activities on financing the development of the country's forestry and plantation sector, Minister of Forestry and Plantations Muslimin Nasution said on Tuesday.

Muslimin said that special financial institutions for forestry and plantation businesses were badly needed to overcome capital problems which have discouraged investment.

Most investors in plantations, he said, were forced to abandon their projects due to difficulties in obtaining loans from local banks.

The country's commercial banks are reluctant to channel credits to the forestry, plantation and agriculture businesses because they were considered to hold greater risk than other business activities.

"Conventional banks mostly charge very high lending rates and this is not suitable for long-term investments such as in the forestry and plantation activities," he said after opening the ministry's national meeting.

He recommended lower rates for them than other sectors because it would take years for investors in the resource-based businesses to gain profits.

Muslimin said that executives of the two banks assured him that they would be able to do the job, particularly in helping medium-sized businesses.

The minister said the Association of the Indonesian Wood Panel Producers (Apkindo) injected about Rp 150 billion (US $16.66 million) into Bukopin and Rp 50 billion into Bank Muamalat to strengthen their lending capacities. (gis)