Credit guarantees to come for shoe and textile firms
JAKARTA (JP): The government has promised Indonesian textile and shoe firms that its facility guaranteeing the companies' letters of credit (L/Cs) will be available within a week or two, industry leaders said yesterday.
The chairman of the Indonesian Footwear Association (Aprisindo), Anton J. Supit, said yesterday Minister of Industry and Trade Mohamad "Bob" Hasan had pledged the facility, which includes US$1 billion of guaranteed funds, would be available soon.
"We have expressed our concerns to him that we wouldn't be able to produce anymore if the L/C problem is not resolved soon," Anton told The Jakarta Post after a meeting with Hasan yesterday.
He said the newly elected minister expressed his full support to help the industry, as exports were very crucial.
Hasan met with executives of Aprisindo and the Indonesian Textile Association yesterday afternoon to discuss the latest happenings in the industries, both of which are suffering from a scarcity of raw materials.
The scarcity is caused by the tendency of international banks and buyers to refuse letters of credit issued by Indonesian banks.
Former industry and trade minister Tunky Ariwibowo recently started a project cooperating with seven foreign banks to guarantee the L/Cs issued by six state-owned banks to boost the import-heavy textile and shoe industry.
Under such a facility, eight shoe companies and 16 textile firms will be able to use their L/Cs to import materials through the state banks appointed by Bank Indonesia, the central bank.
The textile and shoe companies will be given a six-month period to repay their debts to the state banks.
The foreign banks are ABN AMRO, Bank of America, Standard Chartered, Bank of Tokyo, Bank of Japan, Bank of Tokyo Mitsubishi and Bank Industrial of Japan.
Should the issuing banks default on the L/C payments, their foreign counterparts could directly withdraw from the central bank, which will provide a guarantee fund amounting to US$1 billion for the facility. (das)