Exporters to get cheaper loans

JAKARTA (JP): The government will soon enter into a deal with eight healthy domestic banks designed to provide exporters and distribution companies with Rp 2.5 trillion (US$192.31 million) in cheaper loans, Finance Minister Bambang Subianto said yesterday.

"The agreement will be signed in the next couple of days," he said after presenting the revised state budget for 1998/1999 to the House of Representatives (DPR).

The eight banks involved in the scheme are Bank Negara Indonesia, Bank Rakyat Indonesia, Bank Bali, Bank Lippo, Bank Pan Indonesia, Bank Buana Indonesia, Bank Internasional Indonesia and Bank Niaga, sources said.

The loans would be issued at interest rates below current market levels, bankers said.

They added that the government would compensate the participating banks by allowing them to swap non-performing loans for government bonds, yet to be issued, up to the value of the cheap loans which they issued under the scheme.

Indonesian exporters have failed to benefit from the sharp depreciation of the rupiah against the U.S. dollar because they have to provide local banks with up-front payment in full in order to obtain a letter of credit to import raw materials.

The distribution sector is also facing difficulties as a result of serious damage inflicted during the May riots. (rei)