China, RI sign barter deal to boost two-day trade

China, RI sign barter deal to boost two-day trade

JAKARTA (JP): Indonesia and China agreed here on Wednesday to
trade some of their products through a barter deal to boost the
declining bilateral trade figures.

At the same time, China also agreed to provide US$200 million
in export credit and $3 million in grant form to help crisis-hit
Indonesia.

Secretary General of the Indonesian Chamber of Commerce and
Industry (KADIN)-China Committee Chris D. Walean said on
Wednesday that the arrangement would cover all types of
commodities, but in the initial stage it would be focused mainly
on bartering Chinese medicines for Indonesian timber and
agricultural products.

"China expects to trade its sugar, medicines and raw materials
of drugs, soybean and soybean pellets, green beans, cotton and
machinery for Indonesian logs, sawn timber, plywood and crude
palm oil (CPO), rubber, and oleochemical products," Chris said on
the sidelines of a business lunch held for the visiting
delegation of the Ministry of Foreign Trade and Economic
Cooperation of China (MOFTEC) and the Association of Indonesia-
China Economic, Social, and Cultural Cooperation.

"They also want our paper and paper products, cocoa, coffee,
fertilizers and bicycle spareparts," he said adding that the Bank
of China and state Bank Negara Indonesia would handle financing
of the agreement.

Chris, who is also the association's head of trade and
industry department, said that the implementation of the
countertrade agreement would be coordinated by Kadin because the
World Trade Organization (WTO) could not allow the government
involvement in such a trade deal.

"As the first step, Kadin has named four companies to conduct
the countertrade activities, the giant Tirtamas Group, state-run
trading company PT Dharma Niaga and PT Pantja Niaga and PT
Manggala Purnama Sakti," Chris said.

He said that the four companies were chosen because they have
good access to commodities, and have long-term good relationships
with Chinese counterparts.

"But in the future Kadin will appoint more companies to join
the counterparting activities, as long as they can meet the
requirements," he said.

Export credit

Chris said that aside from the counterparts agreement, the
Chinese government had also agreed to provide US$200 million in
export credit facilities and another $3 million as a grant in the
form of medicines and raw materials.

The Memorandum of Understanding on the countertrade and export
credits was signed in Jakarta on Wednesday.

He said that the export credit would be used mainly to import
foodstuffs, especially rice, soybean, corn and sugar from China.

The interest rates imposed on these export credits would be
one percent over the Jakarta interbank offered rates (Jibor) with
a grace period of three years, he said.

Chris said the medicines grant had been handed over to the
Ministry of Health which would take care of its distribution,
earlier this month.

MOFTEC's Director General of Asian Affairs Huo Guochai said
that Chinese businessmen were still upbeat on the Indonesian
economy.

Huo leads a Chinese trade delegation, which consists of 19
members, among them government officials, and representatives of
the banking and private sectors. The delegation met high ranking
officials of the Ministry of Industry and Trade, Ministry of
Finance, State Logistics Agency (Bulog), the National Development
Planning Board and state banks.

Meanwhile, the chairman of the Association of Indonesia-China
Economic, Social, Cultural Cooperation, Sukamdani S. Gitosardjono
estimated that the two-way trade between Indonesia and China
could drop to $2.5 billion this year from $3.7 billion last year
due to a decline in Indonesia's imports.

"In January-May period of this year, the trade balance between
the two countries declined by 30.28 percent to $1.19 billion from
$1.55 billion in the same period of 1997. During the period, our
imports dropped by 47.4 percent to $325.8 billion from $619 in
January-May period of 1997 while exports fell by 7.3 percent to
$865.7 billion from $934 billion," he said.

Sukamdani said that China ranks fifth among Indonesia's main
export destinations. Last year, the country's exports to China
reached $2.2 billion while its imports from China were $1.52
billion. (gis)