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)