S'pore, RI agree bilateral trade financing scheme

Fri, 27 Mar 1998, 00:00 WIB | Source: REUTERS

SINGAPORE (Reuters): Singapore and Indonesia will launch a
bilateral trade financing scheme, state television quoted Prime
Minister Goh Chok Tong as saying yesterday.

It said Goh told Singapore reporters at the end of a two-day
trip to Thailand that this trade guarantee should be backed by at
least US$2 billion, which would come from Singapore's pledge to
the International Monetary Fund (IMF) rescue package for
Indonesia.

Goh said he might be able to supply details next week.

Singapore bankers would be consulted to take part in the
scheme.

Goh said the scheme had come at Indonesia's request and would
have some flexibility built in so other countries could
participate later.

Exports, such as those from Singapore manufacturers, would be
covered under the scheme.

State television quoted Goh as saying his proposal for a
multi-lateral trade financing scheme for Indonesia depended on
the support of the Group of Seven (G-7) countries.

So far, the G-7 countries had not shown much interest.
Goh said they preferred their own financing schemes.

Goh suggested in early February that a multilateral consortium
be formed to guarantee letters of credit (L/Cs) for Indonesian
companies in essential export industries.

Indonesian trade has been hit hard by the Asian currency
crisis, which has seen the Indonesian currency, the rupiah, fall
by about 70 percent since mid-1997.

As a result, Indonesian firms have found it difficult to get
their L/Cs accepted by international suppliers, hampering the
import of raw materials vital for manufacturing industry.

Goh wrote to all the G-7 countries -- the United States,
Canada, Japan, Britain, France, Italy and Germany -- as well as
China, Australia, Brunei, Malaysia and the Netherlands, asking
for their views on the subject, Singapore said this month.

But many Western countries have been reluctant to get involved
in any scheme to support Indonesia until it complies fully with
its agreements with the IMF over the restructuring of its
economy.

The $2 billion worth of guarantees falls far short of the US$8
billion target Goh said last month he thought was achievable.

Meanwhile an IMF official said in Tokyo yesterday that
Indonesia and the International Monetary Fund made "reasonably
good progress" in their talks on a new package of measures to
revive the Indonesian economy.

But IMF official Jack Boorman said he could not predict when a
new agreement would be reached.

"We are making reasonably good progress, but it's very
complicated," Boorman said. "One doesn't want to rush.

"We want to make sure we have an agreement that everyone
understands and that can be carried out effectively," he said.

Asked when such an agreement might be reached, Boorman said:
"I can't put a time on it."