`Equator Principles won't hurt investment'
`Equator Principles won't hurt investment'
Dadan Wijaksana, The Jakarta Post, Jakarta
The decision by the world's leading commercial banks to apply
environmental principles when financing projects in developing
countries would not dampen investment prospects in Indonesia, an
expert said.
"Frankly speaking, I do not think that it will discourage
investment here because at the implementation level there is
going to be -- to some extent -- a sort of compromise to strike a
balance between the interests of creditors and debtors.
"This means that the loans will continue, but there will be
agreed action plans or efforts to reduce and minimize the adverse
impacts of the projects on the environment," Citibank economist
Anton Gunawan told The Jakarta Post on Friday.
Anton was commenting on a joint statement issued earlier by
the World Bank stating that ten major banks from seven countries
would adopt a series of guidelines on social and environmental
issues in loans to developing nations.
The banks will apply the agreement -- known as the "Equator
Principles" -- for financing purposes in all industrial sectors,
including mining, oil and gas, and forestry.
The ten banks are ABN AMRO Bank and Rabobank of the
Netherlands; Barclays Plc. and Royal Bank of Scotland of Britain;
U.S.-based Citigroup Inc.; French-based Credit Lyonnais; Credit
Suisse Group of Switzerland; HVB Group and WestLB AG of Germany;
and Westpac Banking Corporation of Australia.
According to the World Bank, these banks extended a total of
US$14.5 billion in project loans in 2002 worldwide, with 30
percent of those going to developing countries.
Anton said that the initiative had been under discussion for
some time in various international economic forums, including the
World Trade Organization and Asia Pacific Economic Cooperation
forum.
"They have been asking for more participation from the private
sector to help create sustainable (economic) development. So,
this should serve as a response," he added.
He admitted that the adoption of the agreement would raise
costs on the part of borrowers, but not to a level that would
discourage investment.
"All they (borrowers) have to do is to make a proper
assessment on the possible impacts of the project on the social
and environmental sectors. The cost should not be that high."
Key points in Equator Principles
1. The borrower has to make assessments on such issues as
sustainable development and the use of renewable natural
resources; protection of human health, cultural properties, and
biodiversity; avoiding the use of dangerous substances;
socioeconomic impacts.
2. The assessment will be conducted in compliance with the
applicable host country laws, regulations and permits required by
the project.
3. The borrower has to covenant to provide regular reports,
prepared by in-house staff or third party experts, on compliance
with the Environmental Management Plan (EMP).
4. As necessary, lenders can appoint an independent environmental
expert to provide additional monitoring and reporting services.
5. The principles apply to projects with a total capital cost of
US$50 million or more.
Dadan Wijaksana, The Jakarta Post, Jakarta
The decision by the world's leading commercial banks to apply
environmental principles when financing projects in developing
countries would not dampen investment prospects in Indonesia, an
expert said.
"Frankly speaking, I do not think that it will discourage
investment here because at the implementation level there is
going to be -- to some extent -- a sort of compromise to strike a
balance between the interests of creditors and debtors.
"This means that the loans will continue, but there will be
agreed action plans or efforts to reduce and minimize the adverse
impacts of the projects on the environment," Citibank economist
Anton Gunawan told The Jakarta Post on Friday.
Anton was commenting on a joint statement issued earlier by
the World Bank stating that ten major banks from seven countries
would adopt a series of guidelines on social and environmental
issues in loans to developing nations.
The banks will apply the agreement -- known as the "Equator
Principles" -- for financing purposes in all industrial sectors,
including mining, oil and gas, and forestry.
The ten banks are ABN AMRO Bank and Rabobank of the
Netherlands; Barclays Plc. and Royal Bank of Scotland of Britain;
U.S.-based Citigroup Inc.; French-based Credit Lyonnais; Credit
Suisse Group of Switzerland; HVB Group and WestLB AG of Germany;
and Westpac Banking Corporation of Australia.
According to the World Bank, these banks extended a total of
US$14.5 billion in project loans in 2002 worldwide, with 30
percent of those going to developing countries.
Anton said that the initiative had been under discussion for
some time in various international economic forums, including the
World Trade Organization and Asia Pacific Economic Cooperation
forum.
"They have been asking for more participation from the private
sector to help create sustainable (economic) development. So,
this should serve as a response," he added.
He admitted that the adoption of the agreement would raise
costs on the part of borrowers, but not to a level that would
discourage investment.
"All they (borrowers) have to do is to make a proper
assessment on the possible impacts of the project on the social
and environmental sectors. The cost should not be that high."
Key points in Equator Principles
1. The borrower has to make assessments on such issues as
sustainable development and the use of renewable natural
resources; protection of human health, cultural properties, and
biodiversity; avoiding the use of dangerous substances;
socioeconomic impacts.
2. The assessment will be conducted in compliance with the
applicable host country laws, regulations and permits required by
the project.
3. The borrower has to covenant to provide regular reports,
prepared by in-house staff or third party experts, on compliance
with the Environmental Management Plan (EMP).
4. As necessary, lenders can appoint an independent environmental
expert to provide additional monitoring and reporting services.
5. The principles apply to projects with a total capital cost of
US$50 million or more.