G-15 businesses call for use of local currencies

JAKARTA (JP): Private sector representatives from members of the Group of 15 (G-15) developing nations have urged their governments to promote the use of local currencies intra G-15 trading, an Indonesian delegate said on Wednesday.

Trade chairman of the Indonesian Chamber of Commerce, Soy Martua Pardede, who during the G-15 meetings is representing the Indonesian private sector, said members have called on their respective governments to help their domestic banks issue letters of credit (L/C) using local currencies.

"We have also asked the G-15 governments to support countertrade schemes or the use of local currencies in letters of credit (L/C) among G-15 countries," Soy told reporters on the sidelines of the two-day summit at the Jakarta Convention Center.

He said banks in G-15 member countries could arrange payment terms with one another that would allow local businesses to secure L/Cs using their respective currencies.

Meanwhile, a countertrade scheme, he said, would prevent exporters from parking their foreign earnings abroad as their earnings would be in local currency.

Under this scheme, a country exports its local products in exchange for receiving other products from its trading partner.

A countertrade scheme makes the use of the U.S dollar unnecessary, since exporters receive earnings only after the imported products are sold on the local market.

He said the Indonesian government agreed "in principle" with the proposal but wanted to study how the proposal would affect the L/C schemes.

Soy admitted the country's fragile banking sector made it difficult to raise funds for exporting companies wanting to open L/Cs.

He suggested that Indonesia use cheap loans from the Islamic Development Bank (IDB) or Bank Expor Indonesia (BEI).

Since last week, the delegations of the G-15 nations have been present in Jakarta to hammer out workable ways of closer cooperation among their developing economies.

Its members include Algeria, Argentina, Brazil, Chile, Colombia, Egypt, India, Indonesia, Iran, Jamaica, Kenya, Malaysia, Mexico, Nigeria, Peru, Senegal, Sri Lanka, Venezuela, and Zimbabwe.

Soy said that the first 2.5 days of meetings that preceded the G-15 summit, were allotted to the G-15 private sector.

He expressed optimism that the G-15 summit would end in a joint declaration that would broadly encompass the proposals of the private sector.

Among the other proposals, he said, was one to boost the trade of small and medium enterprises among G-15 members.

Another recommendation is to promote the use of the Internet to boost communications among businesses, he went on.

According to Soy, better communication would eventually lead G-15 economies to use more of their own resources to trade with one another.

He said the private sector hoped to promote banks from G-15 member countries in order to reduce dependence on banks from developed countries.

"We won't have to use banks in Europe, American or Japan, because they charge us more," he said.

Soy explained that the true aim of the G-15 was to foster cooperation between developing countries thereby gaining a stronger bargaining position in the world economy.

He added that the G-15 economies stood a better chance against the threat of globalization through conducting joint negotiations with the developed economies. (bkm)