Export financing body to open soon

Export financing body to open soon

JAKARTA (JP): The government-sponsored Export Financing Agency
will most likely begin operations in February to overhaul
unresolved trade financing issues, Industry and Trade minister
Rahardi Ramelan said on Monday.

"If everything works out fine, God willing, it will start in
February," Rahardi told reporters in his office.

He declined to name the bank which would be transformed into
the agency, but confirmed that it would be one of the four banks
taken over by the government in August.

They are Bank Central Asia, Bank Danamon, Bank PDFCI and Bank
Tiara Asia.

Many have suggested that PDFCI is the likely candidate to be
transformed into the financing agency.

The financing agency, designed to boost exports, will focus on
providing subsidized, reshipment working capital and export
credits for exporters to maintain production.

The agency will provide guaranteed short-term export financing
and export insurance, as well as operate as an export information
and data center.

Local exporters have been having trouble financing their
imported materials because foreign banks have rejected letters of
credit (L/Cs) issued by the country's beleaguered banks.

Although the government has guaranteed local L/Cs, local
banks, facing mounting bad loans, remain reluctant to issue L/Cs
to exporters unless they have cash collateral.

Rahardi said the government was currently in the process of
"cleaning up" the appointed bank.

"This process is still ongoing, but we do want a bank that
already has the infrastructure, human resources and ability in
making transactions," he said.

Rahardi admitted that he had not been able to resolve trade
financing problems faced by export-related industries since he
took up the ministerial post in June.

"Since I became a minister, none of the trade financing
schemes we designed have worked so far," he admitted.

He said the problems would not be resolved without the
recovery of the beleaguered banking sector.

Currently, many export-related companies are having
difficulties financing their imports of raw materials, except for
those affiliated with foreign companies.

Rahardi said he was determined to boost exports, because many
producers focusing on the local market would have to shift their
market orientation as the local market would remain sluggish next
year following low economic growth.

The government has estimated economic growth will reach
between minus 1 percent and plus 1 percent next year, compared to
minus 13 percent this year. (das)