Insurance for Dutch firms set to spur trade with RI

Insurance for Dutch firms set to spur trade with RI

AMSTERDAM (Reuters): The Netherlands said on Tuesday credit insurance facilities would be granted to Dutch companies exporting to Indonesia, in an effort to stimulate trade between the two countries.

During the current year, insurance facilities for short term export transactions with Indonesia of up to a total of 250 million guilders (US$123.5 million) per quarter will be granted, the finance and economic affairs ministries said in a statement.

"Based upon a credit term of on average some three months, a total annual export volume of one billion guilders can be realized," the ministries said.

A Finance Ministry spokesman valued Dutch exports to Indonesia at around one billion guilders in 1997.

"As a result of the economic crisis in Indonesia, trade of the Netherlands with that country has nearly come to a standstill ... with negative consequences for the Indonesian population and Dutch trade and industry," the ministries said.

The credit insurance facility will become available after the International Monetary Fund (IMF) has taken a formal decision on its agreement with Indonesia and has said it will effectively resume payments to the former Dutch colony.

If the proposed export credit insurance spurs imports, the measure will probably lead to a picking up of Indonesian production and exports, the ministries said.

"This can lead to a gradual recovery of confidence in the Indonesian economy, resulting in a possible raise of the value of the rupiah," the ministries said.

The insurance facilities would also help Indonesia with the import of essential goods such as food and drugs, they added.

The short term export credit insurance facilities will be handled by the Nederlandsche Credietverzekering maatschappij NV (NCM), which specializes in providing credit insurance to both national and international firms.