Govt to extend dollar loans to private firms

Govt to extend dollar loans to private firms

JAKARTA (JP): The government is to extend U.S.-dollar loans to
local export-oriented firms to help boost the country's non-oil
exports, Minister of Industry and Trade Tunky Ariwibowo said here
Thursday.

He told journalists at his office that more than 200 local
companies had registered their names for the dollar loans to
boost their working capital.

"The chance for companies to register their names is still
wide open. We believe there are still a lot of companies out
there that need help to continue their business," he said.

Tunky invited journalists to his office Thursday to explain
the government's Upakarti awards. These will be presented to 64
people who have made prominent contributions to developing small
businesses.

President Soeharto is scheduled to present the awards on Dec.
4.

Tunky said that his ministry and Bank Indonesia, the central
bank, would assess the companies' applications and decide the
size of the loans to avoid any misuse of funds.

He said that priority would be given to exporters with special
status but his ministry would still consider applications from
companies outside this category.

The Indonesian Textile Association's secretary-general, Benny
Soetrisno, said most of the companies which had applied for the
loans were textile and textile-related.

"Most of the companies are from the textile industry because
the industry is the most active exporter and most of them are
exporters with special status," he said.

He said 27 of the association's members alone had applied for
loans totaling Rp 1.2 trillion (US$325 million).

Tunky said the government, through the Ministry of Industry
and Trade, the Ministry of Finance and Bank Indonesia, had formed
a policy to disburse dollar loans for export companies to
supplement their working capital.

The loans aim to help exporters, especially those suffering
from the rupiah's depreciation against the U.S. dollar, to
finance their operations.

Tunky declined to disclose the amount of the allocated funds
for the special loans, but estimated that the loans would total
around US$5 billion.

He also declined to mention where the funds would come from.

Tunky's statement adds to the confusion following earlier news
reports quoting President Soeharto as saying that he had
instructed his monetary authorities to disburse a US$5 billion
stand-by loan committed by Singapore to medium and big
businesses.

Singapore Prime Minister Goh Chok Tong was quoted yesterday as
saying that recent media reports that its US$5 billion aid to
Indonesia would be used to bail out insolvent private companies
were not true.

Goh said he had raised the matter with President Soeharto at a
private discussion in Vancouver who confirmed that the reports
were not true.

Both leaders were in Vancouver for the Asia-Pacific Economic
Cooperation (APEC) forum conference early this week.

There has been some confusion in recent days over whether
Singapore's loan, pledged as a back-up facility to complement the
US$23 billion financing package from the International Monetary
Fund and associated organizations, would be diverted to the
private sector.

The confusion started over the weekend when Aburizal Bakrie,
Chairman of the Bakrie Group, told Indonesian newsmen in Cape
Town, South Africa, who were accompanying President Soeharto on a
visit that the President had instructed monetary authorities in
Jakarta to disburse Singapore's $5 billion facility to help
export-oriented local companies.

Goh was quoted by the Singapore Business Times as saying that
"the loan that we give or will give to Indonesia when it is
needed-- it has not been given yet-- is a facility which they can
draw upon if they need it for balance of payments purposes."

"It will not be used as loans for small companies in
Indonesia," Goh said.

In a related development Deputy Prime Minister Lee Hsien Loong
said that Singapore also had a separate arrangement with Jakarta
to support the Indonesian rupiah as and when it is needed.

Lee was quoted by the same newspaper on Thursday as saying in
Singapore " we have an arrangement for a standby US$5 billion
loan, and we also have an arrangement to intervene when the
rupiah is undervalued, which it was. But how much you need, how
to do it, these are tactical decisions and there is no fixed
limit."

Bank Indonesia clarified earlier this week that it would be
the rupiah derived from Singapore's currency market intervention,
not Singapore's promised standby loans, that would be used to
finance the loans to local businesses.

"Our standpoint remains the same as before, I think you all
have got our statement" Bank Indonesia managing director Paul
Soetopo Tjokoronegoro told journalists Thursday. (08/das)