Japan to provide troubled local firms with loadns

JAKARTA (JP): Japan plans to provide working capital loans to troubled joint-venture labor-intensive manufacturing firms to help them survive the crisis.

They include companies producing electronics, medicines, garments and automobiles, the vice minister for international affairs at Japan's Ministry of International Trade and Industry, Hisamitsu Arai, said here yesterday.

Arai said he would seek new funds, on top of the already committed loans to Indonesia, to support the plan, which was originally proposed by Indonesian Minister of Industry and Trade Rahardi Ramelan at their meeting.

"Mr. Ramelan asked for our help to support those industries, and we agreed to find a way out, especially concerning the funding," Arai told The Jakarta Post.

However, Arai declined to mention the amount of funds Japan would provide to recapitalize those firms, saying it was too early to judge.

Japanese-Indonesian joint ventures in those four sectors have cut productions by an average of 10 percent and they face serious cash-flow problems.

Unfortunately, they cannot afford new loans from local banks due to high lending rates of more than 60 percent per annum.

"If we don't save them, I'm afraid, they will go bankrupt. And if this happens, it will leave many people without work. So we have to help them to continue operating and exporting," he said.

He said that if those industries were not saved from bankruptcy, it would take five to six years to rebuild them.

Arai said he and Rahardi also agreed to pursue ways to help small and medium Indonesian enterprises.

During his two-day official visit here, Arai also met with Coordinating Minister for Economy, Finance and Industry Ginandjar Kartasasmita.

At his meeting with Ginandjar, Arai said, he discussed, among other things, Indonesia's sovereign debt restructuring.

He said Japan remained committed to its position that Indonesia should continue to pay both principal and interest on its debts to Japan, which in turn would provide new loans to Indonesia.

"The debts must be paid, and Indonesia will get new loans," Arai said.

Nevertheless, Arai said, Japan would attend the Paris Club of Indonesia's creditors in Paris next month to discuss the restructuring of Indonesia's sovereign debts.

When asked about Japan's policies to absorb more exports from Indonesia and other Southeast Asian nations, Arai said Japan was already an open country and therefore, there should be no restrictions for Indonesian or other Asian countries to enter Japan.

The problem is that Japan's economy is teetering now, making exports to Japan more difficult due to people's weakening purchasing power.

"The only way to encourage more imports from Indonesia and other Southeast Asian nations is by empowering our own economy so that our purchasing power increases again," Arai said.

He predicted that Japan's economy would start picking up in one or two years after various measures are implemented by the current economic reconstruction cabinet under Prime Minister Keizo Obuchi.

He contended that Japan's manufacturing sector remained one of the most competitive in the world and that the main problem facing Japan's economy lay with the banking sector. Once that sector was fixed, Japan's economy would recover. (rid)