Bukopin, BMI to fund plantation businesses

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)