Govt pledges to help ailing export companies

JAKARTA (JP): The government has pledged to assist ailing export companies procure raw materials and strengthen their working capital.

Minister of Industry and Trade Tunky Ariwibowo said yesterday many export companies faced bankruptcy as letters of credit issued by Indonesian banks were often rejected by foreign banks.

The minister, however, declined to elaborate on the planned aid package. He only promised that it would be announced soon.

"I cannot say when, but it will be announced in a very short period of time, because this problem needs a quick solution," Tunky said after meeting with President Soeharto at his private residence on Jl. Cendana, Central Jakarta.

He cited the shoe, textile and electronics industries as the sectors suffering most because many of their raw materials must be imported.

"The shoe industry, for example, still imports 50 percent of its components. The textile sector is also facing similar problems," said Tunky.

He said many electronics companies here were subsidiaries of overseas firms which could rescue the companies.

Bank Indonesia, the central bank, provided a low interest rate swap facility to export-oriented companies in January. The rate offered was 1 percent lower than market interest rates.

The central bank said the swap facility was essential to ensure that exporters could obtain U.S. dollars to finance their raw materials.

However, many exporters have complained that only companies of large groups with their own banks were able to use the facility.

"Specifically, export-oriented national companies which do not have any link or affiliation with a foreign company will deserve (to use the new facility)," Tunky said about the recipients of the new package.

Singapore Prime Minister Goh Chok Tong proposed a multilateral system of guarantees for Indonesian letters of credit during a Feb. 3 meeting with Soeharto.

Tunky promised he would report the progress of the plan to Soeharto in about two weeks.

"This plan needs more time. We have to take quick measures, especially for companies which need to import raw materials." he said. (prb)