Japanese to aid Indonesia's export financing agency

TOKYO (JP): The Export-Import Bank of Japan (JEXIM) has pledged to find more sources to help finance Indonesia's Export Financing Agency, Minister of Industry and Trade Rahardi Ramelan said on Monday.

"We have secured US$1 billion in a standing loan from JEXIM. However, they told me they want to seek more financial sources to help finance the agency's operations," he said following a meeting with JEXIM executives here on Monday.

Rahardi, who is leading a trade mission to Japan, said the Japanese bank wanted to see the agency established as soon as possible to revive Indonesian exports.

Rahardi told the JEXIM executive that the House of Representatives had passed a bill last month on the special bank as a basis for creating an export financing agency.

"The bill is currently waiting for President Habibie's ratification next week."

He said JEXIM supported the government's decision to form a new institution to carry out export financing activities, instead of transforming an existing bank into an export financing body as initially planned.

"JEXIM said that transforming an existing bank into a financing agency would be more complicated. However, JEXIM requires us to report any progress in establishing the agency."

The government earlier planned to convert Bank PDFCI, one of the four private banks nationalized last year, into an agency of this kind. It later canceled the plan, saying that establishing a new entity would be more favorable.

The export financing agency, which would be named the Export Financing Bank, is designed to provide financial assistance to Indonesian exporters who have suffered from the collapse of the local banking industry.

Rahardi said JEXIM questioned the progress of $400 billion worth of loans used to finance the country's power restructuring program and the country's private debt restructuring program.

"JEXIM require us to report any progress we reach in establishing a competitive market for electricity and ensure the financial viability of the state-owned electricity company PT PLN.

"The loan is designed to restructure the country's power sector and improve its efficiency."

Rahardi said half of the loan, which was cofinanced by the Asian Development Bank, was disbursed to PLN in March.

"The disbursement of the remaining amount will depend on whether the government increases its electricity tariffs in October and the progress of PLN's restructuring program."

Rahardi said JEXIM also questioned the continuation of the restructuring program if there was a change in government after the June 7 general election.

"So I told them that our country is marching toward a democratization process. It doesn't matter which party runs the country -- it will continue our previous commitment." (gis)