IFC optimistic about Indonesia's prospects

JAKARTA (JP): The International Finance Corporation (IFC), a World Bank agency which lends to the private sector, remains optimistic about the prospects of the Indonesian economy and is even looking to expand and broaden its operations here.

Visiting IFC vice president for investment operations Jemal-ud-din Kassum dismissed "events in the summer" -- which is how he described the currency turmoil hitting Indonesia and other Southeast Asian nations -- as temporary.

In the event of the crisis, the IFC has reviewed its position in the region, Kassum said.

"We're very pleased," he said of the results on the Indonesian review. "It confirmed our judgment that whatever was going on, was a temporary phenomenon that has to be dealt with."

He predicted an even stronger private sector emerging after the crisis in view of the steps that had been taken by Indonesia.

Kassum wound up his five-day visit to Indonesia yesterday after meeting with several top Indonesian officials and representatives of the business community.

He was accompanied by the New Delhi-based IFC director for the Asian Department Rashad Kaldany and Washington-based IFC South Asian manager Sami Haddad.

Kasum, who praised the Indonesian government for recognizing the need to strengthen the banking sector, said he was particularly impressed by the economic management team.

IFC's total lending commitment to date is US$1.4 billion to 43 companies, including $362 million committed last year in six different transactions. Half of the loan commitments were through an arrangement which involved local banks in the projects.

Despite strong exposure to currency upheavals, Kassum said IFC's loans portfolio in the region remained strong.

None of the Indonesian debtors had difficulties repaying their debts, he said.

"On balance, there has not been any problem," he said.

Kassum added IFC was hoping to increase its operations in Indonesia, broadening its coverage to more enterprises outside Java and expanding its activities into new areas like education.

"We're ready. Our door is very much open," he said.

Kaldany said IFC was doubling its office in Jakarta in the coming months, focusing on small and medium scale enterprises.

IFC has already financed its first hospital project in Indonesia. The $49 million Siloam Gleneagles opened in the Lippo Karawaci satellite city in Tangerang last year.

"We're looking at other hospitals," Kaldany said, adding that IFC was working with Gleneagles Corp of Singapore to open up diagnostic centers, mostly in Asia.

IFC was also looking at financing education projects such as management training institutions and primary and secondary education, he said.

There would not be any overlapping with the World Bank because IFC would be financing the private sector, he said.

Kassum described IFC's overriding characteristic as "being a pioneer", expanding into new areas and territories.

IFC chief mission for Indonesia and Malaysia, Antonio David, said none of the two plantation companies financed by IFC -- one in West Kalimantan and another in Riau -- was involved in the forest fires blamed for much of the haze enveloping Sumatra and Kalimantan.

"IFC used the World Bank environmental safety guidelines," Kassum said.

"We go out of our way to perform environmental due diligence," he said, adding that this includes banning the use of fire for clearing land. (emb)