Korean bank, BNI agree to finance imports

JAKARTA (JP): Korean Export and Import Bank (KEXIM) and state Bank Negara Indonesia (BNI) joined forces on Wednesday to help improve bilateral trade between the two countries.

Under a one-year banking and payment agreement, the Korean and Indonesian banks will act as clearing agents in the payment of imports from each country.

The secretary-general of the Ministry of Industry and Trade, Muchatar, said that with the help of the two banks, Indonesians and Koreans could use their own currencies in financing imports.

"This scheme will certainly improve our bilateral trade, which has been sluggish due to the shortage of foreign exchange and the rejection of letters of credit issued by local banks," he said after the agreement was signed.

He said Indonesia's bilateral trade with South Korea plunged by 29.19 percent in 1998 to US$4.09 billion from $5.7 billion in 1997. Bilateral trade in the first quarter of this year dropped by 0.43 percent compared to the corresponding period last year.

South Korean Ambassador Jung Pyo Hong said he hoped the agreement signed by the two banks would enable the two countries to promote trade relations.

He said that although his country had adequate foreign reserves, the agreement would benefit South Korea in reducing the cost of its foreign exchanges.

The vice president of the Indonesian Chamber of Commerce and Trade (Kadin), Soy M. Pardede, said the involvement of the two banks in trade activities would aid local companies who wished to import goods from Korean firms.

He said a number of local companies wanted to import goods from Korea, but were unable to realize their plans due to a lack of foreign currency.

"With the facilities provided by the two banks, Indonesian companies will no longer need to pay their imports in U.S. dollars. This is really good news for local firms," he said. (01)