Private banks still undecided on Timor loans

JAKARTA (JP): Private banks invited to join a consortium to finance the national car project have still not decided how much they will lend, or whether they want to participate in the syndicate.

State-owned Bank Dagang Negara's (BDN) president Subagyo Karsono said yesterday that BDN, as the consortium's leader, was still waiting for private banks to say whether they will commit to joining the syndicate to loan to PT Timor Putra Nasional, the beneficiary of the national car project.

He said state-owned Bank Tabungan Negara would join the other three state banks -- BDN, Bank Rakyat Indonesia and Bank Expor Impor (Exim) -- in the consortium.

"As for state banks, there would be no problem in either their participation and commitment," Subagyo said at his office.

He also confirmed that BDN had given bridging finance to the car project.

The government granted Timor Putra exclusive rights to manufacture a so-called "national car" last year. It is currently cooperating with South Korea's Kia Motors Corp to produce the cars.

Fully assembled Sephia sedans -- renamed Timor -- are imported from South Korea because Timor Putra's production facilities are still being built.

The national car receives import duty and luxury tax exemptions, driving its cost 60 percent lower than other cars on the domestic market.

Timor Putra president Hutomo Mandala Putra said in a hearing with members of the House of Representatives last week that a decision on the consortium was expected yesterday.

Subagyo said the decision had been delayed indefinitely until the private banks decided whether they would participate, and if so how much they would lend.

"We still need time to finalize this loan syndicate. The process toward finalization is still going," Subagyo said.

Subagyo denied that Kia's financial plight was behind the delay.

"Many statements have been issued assuring us of the continuity of the national car project despite Kia's problem. So, it should not be a problem," he said.

Timor Putra proposed it be loaned US$840 million by a syndicate of state and private banks to help finance the construction of its manufacturing facilities in Cikampek, West Java.

The company said it would also raise $600 million itself to build the facilities.

Hutomo, President Soeharto's youngest son, said his company had not asked for special facilities such as soft loans for the project.

He said his company expected the loans to carry commercial interest rates.

He said he was optimistic that Timor Putra would be able to repay the loans within six years, including a two-year grace period. (rid)