Private banks still undecided on Timor loans

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)