Exim Bank to finance RI infrastructure projects

JAKARTA (JP): The Export-Import Bank of the United States will finance various infrastructural projects to be carried out by the private sector in Indonesia, says the bank's president.

"Not only do we want to continue, (but also) we want to aggressively increase the amount of money that we lend to Indonesia, both to the government and the private sector," Kenneth Brody told reporters after meeting with President Soeharto at the Bina Graha presidential office here yesterday.

He said the bank saw "special opportunities" in Indonesia to finance infrastructural projects in the power, water, transportation and telecommunications sectors.

The banker, however, declined to name the Indonesian companies which will receive the funding. "We are still negotiating," he said.

He said the bank will move into those projects mainly through special arrangements called "limited recourse projects."

Brody said that this type of financing is based on repayments through the project's cashflow, which would enable the bank to play a more significant role in infrastructural development without adding to Indonesia's debt.

Coordinating Minister for Economy and Finance Saleh Afiff warned last month that the country's offshore debt had reached US$90 billion, nearing what the minister termed the "psychological barrier" of $100 billion.

Banking

Brody also said yesterday that the Indonesian banking sector, which has been rocked by bad-debt scandals and poor credit ratings, should be viewed from a long-term perspective.

Standard & Poor's, a U.S. credit rating company, recently said that the Indonesian banking system in "a high risk environment," one "undergoing a period of financial stress."

"The problem in Indonesia's banks should not be exaggerated. It happens everywhere," he said.

The U.S. Exim Bank is Washington's official export credit rating agency and helps finance and promote the sale of American goods and services around the world.

The bank has 40 years of experience in dealing with the government of Indonesia. Its current portfolio in this country totals US$1.7 billion.

Exim Bank has financed several projects in Indonesia, including the sale to Garuda Indonesia by the Boeing Corporation of seven B-737s and two B-747s worth over $600 million and the sale of $55.9 million of coal boiler equipment by the Babcock & Wilcox Company of the U.S. to the State Electricity Company (PLN). (hdj)