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)