Exim Bank's facilities may include crude oil

Exim Bank's facilities may include crude oil

TOKYO (Reuters): The Export-Import Bank of Japan said
yesterday it was open to negotiating on including crude oil in
the list of items Indonesia is entitled to buy using a recent $1
billion loan from Japan.

"The oil and gas sector is not covered in this round of
financial aid," a bank official said.

"But if there is a request from Indonesia, we are ready to
consider including it in the list of (raw material) imports for
exporters which are covered by the loan," the official said.

The Japanese bank signed an agreement on the five-year loan
with Indonesia's Finance Ministry on Thursday in a bid to improve
Indonesia's exports situation.

Despite the rupiah's depreciation, Indonesian exports have
been shrinking because exporters are having a hard time importing
raw materials and parts for production facilities.

Amid Indonesia's lack of foreign reserves and the instability
of the financial system, foreign suppliers were reluctant to
accept letters of credits issued by Indonesian commercial banks,
a statement by the Export-Import Bank said.

The $1 billion loan was aimed at boosting the credibility of
letters of credit issued by Indonesian banks by injecting funds
into the country's financial sector.

Exporters of 26 products, such as textiles and electronic
appliances, can import raw materials and parts using letters of
credit supported by the Japanese loan.

Oil products are not included in the list.

However, the bank official said plastic products are on the
list, which enables petrochemical manufacturers such as PT
Chandra Asri to take advantage of the loan for feedstock naphtha
imports.

Though a member of the Organization of Petroleum Exporting
Countries (OPEC), Indonesia imports as well as exports crude oil
and oil products.

There was talk recently in the oil market that Indonesia's
state oil firm Pertamina was in negotiations with a western oil
major to buy a very large crude carrier of crude oil, but that
negotiations fell through due to a problem relating to letters of
credit.