Wed, 24 May 2000

Loan syndication formed to help export companies

JAKARTA (JP): Two state banks and at least seven foreign banks have agreed to establish a loan syndication to provide Rp 50 trillion (US$6 billion) in credit facilities for export-oriented firms.

Minister of Industry and Trade Luhut Pandjaitan said he expected the credit from the consortium would start to flow by next month.

"We want the consortium to start working as soon as possible," he told reporters following a meeting with trade associations and bankers.

He said that state Bank Mandiri and Bank Negara Indonesia 46 were part of the consortium, with Mandiri acting as the lead arranger.

It was unclear how much each bank would contribute to the financing facility.

Luhut has said that Bank Mandiri owned some Rp 12 trillion in excess liquidity, which he expected to use as export funds.

Bank Mandiri is the country's largest bank and was formed through the merger of four state banks last year -- Bank Bumi Daya (BBD), Bank Dagang Negara (BDN), Bank Expor Impor Indonesia (Exim) and Bank Pembangunan Indonesia (Bapindo).

However, he fell short of naming the consortium's foreign banks, citing only the British Standard Chartered Bank and the American Citibank.

He said the funds would be mainly channeled to export oriented firms from the textile industry, the steel industry and the electronic industry, among others.

"We've identified 16 export oriented industries that could obtain the funds," he said.

When asked about the maximum amount of funds foreign banks had promised, he said that the amount would depend on demand from the Indonesian side.

"In fact they placed no limits," he said.

Luhut has repeatedly stated his priority to boost the country's exports, believing that it would pull Indonesia out of the economic crisis.

The government has already established Bank Expor Indonesia (BEI) in 1999 with a paid up capital of Rp 3 trillion (US$361 million) to help finance the import of raw materials for export- oriented companies.

Luhut assured he had no plans yet to abolish BEI, but added that he would review the bank's functions.

"It seems that BEI is not functioning as it should be," he said.

Exporters have raised skepticism over BEI's effectiveness, saying the bank's loan mechanism has discouraged them from using its service.

However, BEI director Budi Mulya said the bank had thus far channeled some Rp 845 billion in export credit to over 15 businesses.

"We have over 100 exporters," Budi said.

He expected to provide exporters with some Rp 2.5 trillion in credit this year, despite the presence of new funds sources from the consortium.

Chairman of the National Business Council (DPUN) Sofyan Wanandi said the government expected to boost economic recovery through export earnings.

"We start with the exporters because all they need is working capital," he said.

Sofyan said that exporters welcomed the new consortium as it offered them a direct channel to needed working capital.

While foreign banks, he added, view the consortium as an opportunity to channel their loans with a lower risk of bearing nonperforming loans.

"These exporters already have the goods and the markets," he said.

Sofyan said the consortium would continue to offer loans until Indonesia's exports reach their normal level of some US$50 billion a year.

Furthermore, he said, the government had allowed companies currently under the Indonesian Bank Restructuring Agency (IBRA) to benefit from the export facility.

"As long as the companies can either absorb many laborers or are export oriented," he said.

Aside from helping exporters, the consortium will also provide funds to small and medium-sized companies, he said. (bkm)