Fortis provides $500m for trade financing

JAKARTA (JP): Netherlands-based Fortis Bank NV agreed on Monday to provide US$500 million in a trade financing scheme aimed at assisting Indonesian exporters.

Under the scheme, Fortis will finance the purchase of raw materials using the end products as collateral. State-owned PT Asuransi Jasa Indonesia (Jasindo) will provide insurance against damage to the goods.

Speaking after signing the agreement, Fortis director Paul Schuilwerve said his company planned to provide additional loans in the future.

The scheme was proposed by Jasindo to the Ministry of Industry and Trade, with the stated goal of helping Indonesian exporters overcome the difficulty they face in obtaining letters of credit during this time when local banks are engrossed in their own problems, Jasindo president Amiruddin Riayat said.

"We have been looking for a way to help producers resume exporting," he said, adding that Jasindo would benefit by picking up business without having to go out and search for it.

"PT Sucofindo will supervise the flow of goods, from the storage of raw materials, transportation to factories, to the storing of the end products for shipment," Amiruddin said, referring to the state-owned surveyor company.

The scheme will be offered to companies producing semifinished products which require raw materials such as crude oil, petrochemicals, cotton or yarn and palm oil.

Eligible companies must have experience in exporting and adequate capital.

"Industries producing finished products like shoes or garments are not included in the scheme because if the exports fail, these products are difficult to resell," Amiruddin said.

Minister of Industry and Trade Luhut B. Panjaitan, who witnessed the signing, said he hoped the agreement would bolster Indonesia's exports.

Indonesia's total exports reached $23 billion in the first six months of this year, which is more than half of this year's target of $44.7, Luhut said.

He said past years showed exports tended to increase in August and September, making him confident this year's export target would by surpassed.

"The Ministry of Industry and Trade will help in selecting the recipients for the working capital to minimize the possibility of bad debts," Luhut said in his speech. (10)