IFC, SCB agree to aid RI importers
IFC, SCB agree to aid RI importers
JAKARTA (JP): The International Finance Corporation (IFC) and
Standard Chartered Bank (SCB) signed an agreement on Thursday to
provide some US$125 million in trade financing for Indonesian
importers.
The IFC said in a press statement that the five-year revolving
trade finance facility was part of efforts to help stimulate
recovery in Indonesia's international trade flows.
"Three years into the Asian economic crisis, Indonesian
businesses still have little access to trade finance from the
local banking sector," the IFC said.
"In addition, international banks offer very limited letter of
credit (L/C) confirmation facilities to local commercial banks,"
it added.
The IFC is the investment arm of the World Bank.
Indonesian exporters, which mostly import their raw materials,
have long complained about the limited financial resources
available from the local banking industry currently still
struggling from the crisis.
The domestic banking crisis has also eroded confidence in
local banks causing the limitations on L/C confirmation.
Elsewhere, the IFC said that the additional L/C confirmation
lines would be provided to six selected local banks, including
Bank Mandiri, Bank Internasional Indonesia, Bank Central Asia,
Bank Danamon, Bank CIC and Bank NISP.
It said that the IFC would guarantee 40 percent of each
transaction covered under the facility up to $50 million, while
the SCB, which acted as the confirming bank, would shoulder 60
percent of the risk in each transaction.
Visiting IFC executive vice president Peter Woicke, who signed
the agreement for the Corporation, said that the facility would
expedite the recovery of foreign trade and spur economic growth
by enhancing import financing of essential industrial and
manufacturing inputs.
"The investment will help build confidence in the banking
sector, and, through it, the IFC can reach many businesses in
Indonesia," Woicke said.
The IFC said that it was also considering participation in
other projects that would help strengthen Indonesia's economy and
restore investor confidence.
The IFC is scheduled to sign a similar facility today with
Sumitomo Bank Ltd.
The IFC focuses on providing loans and equity for investments
in the private sector. It has been investing in Indonesia's
private sector through loans and equity since 1968.
IFC officials said last year that it planned to earmark some
$500 million in financial assistance to the Indonesian private
sector over the next few years, particularly for export-oriented
companies operating in the manufacturing sector, oil palm
plantations and coal mining companies. (rei)