Export funding firm to operate promptly

Export funding firm to operate promptly

JAKARTA (JP): The government is confident the planned export
funding agency will be operational this year, despite some
difficulties in its establishment, a senior official at the
Ministry of Industry and Trade said Saturday.

Director General of International Trade Djoko Moeljono said
the agency has to begin operations as soon as possible, saying it
is badly needed to revitalize the country's export activities.

"We have found that setting up the agency is not as easy as we
thought. We have to have long discussions before making it a
reality," he said at the sidelines of a plenary meeting of the
Indonesian Exporters Association (GPEI).

Djoko said the agency should begin operating before April,
because a delay would create more problems for the country's
exporters.

He admitted that difficulties in establishing the export
funding agency were related to procedural matters, saying a new
regulation is needed to support the operation of the agency as
the existing banking laws do not cover such a financing agency.

"We are currently preparing the draft of the bill," he said.

The government initially aimed to set up an export financing
agency in early March. It was planned that Bank PDFCI, one of the
private banks nationalized last year, would be transformed into
an export financing agency.

However, Minister of Industry and Trade Rahardi Ramelan said
earlier this month the government had canceled the plan to use
Bank PDFCI and that it would instead set up a new bank as an
export funding agency.

Djoko said that using an existing bank would be more time-
consuming and complicated than establishing a new one. "Besides,
after assessing the track record of the existing banks, none of
them are qualified enough to operate as an export funding
agency."

The delay in the agency's establishment has raised complaints
from export-oriented companies, which have said that any further
delay would ruin the country's foreign trade altogether.

Djoko said the export financing agency, designed to boost
declining exports, would operate solely in export activities.

The agency is to be financed by the government, which will
hold the majority stake, and by private investors. It will also
receive funding from foreign aid channeled through the
government, and the issuance of commercial papers to raise public
funds, he said.

Initially, the financing agency will provide subsidized, pre-
shipment working capital and export credit for exporters in
financial hardship to maintain their production.

It will provide guaranteed short-term export financing and
export insurance, as well as operating as an export information
and data center.

The economic turmoil has eroded international trust in
Indonesia's banks and made it almost impossible for companies to
obtain letters of credit from local banks to import necessary raw
materials. (gis)