German bank to give DM300 million loan
JAKARTA (JP): German bank Kreditanstalt fr Wiederaufbau (KfW) agreed here yesterday to provide loans worth DM300 million (about US$168.5 million) to Indonesia's private sector.
Gert Vogt, chairman of the German bank for reconstruction, said the loans would be channeled through Bank Indonesia and the country's financing sector "to cover urgent import needs and to bridge liquidity gaps for necessary working capital".
He said DM250 million would be given as trade financing to help the ailing manufacturing sector import raw materials, while the remaining DM50 million would be used to finance small and medium sized enterprises.
He said there was an urgent need to finance manufacturing sector imports because the operations of many companies had come to a standstill.
"We want to make sure that in this difficult situation, the manufacturing sector gets the necessary financial support so that they can begin to produce again," he said.
Vogt said the technical aspects of the loans would be worked out between KfW experts and finance ministry officials in talks beginning early next month, after which the funds would be disbursed.
He said the bank's staff would also provide the finance ministry and Bank Indonesia with technical assistance to help them manage and monitor use of the loans.
The loan agreement signed with top officials from the Indonesian Ministry of Finance is based on a memorandum of understanding signed in February by German's Finance Minister Theo Waigel and Mar'ie Muhammad, his Indonesian counterpart at the time.
Reschedule
Separately, the German finance ministry said in Bonn on Thursday that it would agree to reschedule outstanding debts owed by Indonesia's private sector.
Debt rescheduling is expected to absorb US$2.25 billion of the extra $6.2 billion in fresh funds pledged recently by the IMF and other donor countries and organizations.
Vogt said here yesterday that he was impressed with the changes that have taken place since his last visit to the country in February.
"I am personally encouraged by the future of the country in many respects," he said.
"We trust the country, its economy and its ability to overcome the current situation," he said.
"You cannot change everything overnight", he added in reference to the difficulties continuing to beset the country.
Indonesia changed government in May after massive unrest forced president Soeharto to resign. He was replaced by his vice president, B.J. Habibie.
Vogt said KfW intended to help revitalize manufacturing in the country and to this end would focus particularly on the power, transport, health, and water supply sectors.
He said the bank would also focus on helping small and medium enterprises, a sector which had become the backbone of the German economy.
Vogt arrived here last Wednesday accompanied by top KfW executives.
The delegation met with President B.J. Habibie on Thursday and have also held discussions with a number of the country's top ministers and officials. They return to Germany on Sunday. (das)