RI L/Cs accepted overseas

RI L/Cs accepted overseas

JAKARTA (JP): Overseas banks have started to accept Indonesian
letters of credit (L/C) but they are still limited to importing
particular commodities, a key government official said.

Director General of International Trade Djoko Mulyono was
quoted by Antara Friday as saying that some 67 L/Cs had been
accepted but in particular import commodities only.

He said Australia had reopened its trade credit line for
Indonesia to import commodities including flour, cotton, meat,
powder milk raw material, processed leather, aluminum, machinery
and automotive components.

Overseas banks have recently rejected Indonesian L/Cs due to
the plunging confidence in the crisis-hit country. This impaired
the country's production system, including the export industry,
as imported raw materials were unavailable.

To help solve the problem, Bank Indonesia stored a total of
US$1 billion in overseas banks to guarantee Indonesian L/Cs.

But due to several inadequacies by Indonesian corporates which
were also importers, the guarantee scheme was not effective as
most of the foreign banks declined to open the credit line unless
these were corrected.

Bambang said the foreign banks urged the corporations to solve
the problems first in order to be eligible for the L/C guaranteed
by the central bank.

Textile businesspeople also said that the foreign banks'
hesitation was compounded by the unclear realization schedule of
commitments made by Indonesia's major trading partners to
guarantee the country's L/Cs.

Singapore, Japan, Germany, Canada, the Netherlands and the
U.S. are among countries which have made commitments. (rei)