Inadequate banking ties 'inhibit countertrade'

JAKARTA (JP): Developing countries faced difficulties in conducting countertrade due to the lack of direct banking relationships between them, the chairman of the Tirtamas Group, Hashim Djojohadikusumo, said here yesterday.

Hashim said at the Asia Pacific Countertrade Association conference that countertrade could provide a solution to many developing countries in Asia, Africa, South and Central America and Eastern Europe, which had limited foreign exchange to conduct conventional trade.

But the absence of banking networks between those countries had made it difficult for companies to conduct direct trading as well as to find information about each other's creditworthiness.

"They (banks of developing countries) often represent a significant concentration in advanced economies, so when it comes to finding out about a company or bank in, say, Tanzania or Ukraine, an absence of direct links makes this very difficult," said Hashim, who is also chairman of the conference.

The three-day conference, which will end tomorrow, has drawn 175 participants from 24 countries, including Iran, Germany, Croatia, Ukraine, the Czech Republic, the United States, Australia and Finland.

Hashim said another obstacle to direct trade between developing countries was control by multinational banks over trading in developing countries.

He said British and French banks controlled trading in Africa, while U.S. banks controlled banking networks in Central and South America, and Austrian and German banks in Eastern Europe and the CIS.

Those banks had gained control in those areas after they had established networks during colonial times.

"We tried to buy cotton from certain Francophone countries of West Africa, only to be told to approach trading houses in Paris. We tried to sell medical and pharmaceutical goods in Central Asia, only to be informed that we had to deal with a trading company in Germany," said Hashim, who has a countertrade company called Tirtamas Comexindo.

Bank Indonesia Governor Soedradjad Djiwandono said at the conference that the central bank had helped solve the problem by making banking arrangements with other central banks, particularly in countries that were nontraditional trading partners.

Arrangements had been made with the central banks in 13 countries, including Iran, Russia, the Czech Republic, Uzbekistan, Kyrgyzstan, Kazakhstan, Turkmenistan, Bulgaria, Rumania, Hungary, Slovakia, Pakistan and Argentina, said Soedradjad, in his speech delivered by the head of monetary management department, C. Harinowo.

Indonesia initiated a countertrade policy in 1982 to boost exports in a bid to cope with the sharp drop in oil prices.

Official data showed that Indonesia's non-oil exports under countertrade agreements surged to US$1.2 billion in 1995 from a mere $140 million in 1982. But it was still small compared to overall non-oil exports of $34.95 billion in 1995. (jsk)