RI turns to Australia on trade problems

RI turns to Australia on trade problems

JAKARTA (JP): President Soeharto has asked Australia to help
resolve Indonesia's trading problems by issuing an export credit
guarantee for the country because many foreign banks, including
Australian ones, have rejected its Letters of Credit (L/C).

The President told visiting Australian Foreign Minister
Alexander Downer yesterday that such a guarantee would go a long
way to facilitate trading relations between the two countries.

"Apparently what is needed are some covers or guarantees from
some (foreign) governments that indeed (Indonesian) imports will
be paid for by importers," Minister of Foreign Affairs Ali
Alatas said of the encounter between Soeharto and Downer in their
45-minute meeting.

Domestic bankers and importers have complained that many
foreign banks have refused to accept L/Cs issued by Indonesian
banks unless they were guaranteed by foreign banks.

"What we need is a kind of acknowledgement not only by the
private sector which may have some doubts but by (foreign)
governments that our trading position is strong and is
trustworthy," Alatas noted.

Indonesia's exports to Australia from January to July last
year totaled US$732 million while its imports were about $1.3
billion, according to the Central Bureau of Statistics.

Alatas said that Soeharto did not ask for more financial
assistance from Australia but focused his discussion on corporate
debt.

"The President... explained to Foreign Minister Downer that
at the moment the main problem is how the private sector debt is
being handled... and how to keep our trade going."

As of December last year, Indonesia's foreign debt stood at
$140 billion, $65 billion of which was owed by private sector.

Downer told the President that Prime Minister John Howard and
his cabinet would soon take a decision on Soeharto's request.

"We are prepared to look at the possibility of providing some
government cover for lines of credit," Downer remarked.

Downer announced yesterday that Australia would place several
advisors in Indonesian government agencies, including the
National Development Planning Board and Bank Indonesia, the
central bank, to help develop new employment sector strategies
and to strengthen its banking and financial system.

About the credit-line scheme, Downer said: "This is a
government guarantee through the Export Finance Insurance
Corporation guaranteeing the payment to exporters by importers
from Indonesia over a particular period of time".

Australia pledged a 1 billion dollar loan to the US$40 billion
bail-out package for Indonesia, led by the International Monetary
Fund (IMF) to rescue the later's collapsing economy.

Downer noted that Soeharto was firmly committed to the tough
IMF economic reform package, and he pledged Australia's full
support for him.

"We are doing our best to provide support to Indonesia at this
difficult time," he said.

According to Alatas, Soeharto also assured Downer that
Indonesia's national stability was very solid.

"As you can see stability is solid. There have been of course
a few demonstrations... that is quite normal, they are
expressions of people's views," Alatas said.

After a separate meeting with Alatas, Downer said that his
government would only evacuate its diplomats and citizens when a
country was in an emergency situation.

"And Indonesia is no exception," Downer said when asked by
reporters about such a possibility in the near future. (prb)