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)