WB approves $47m loan to Indonesia

WB approves $47m loan to Indonesia

JAKARTA (JP): The World Bank has agreed to extend a US$47- million loan to Indonesia to improve small and medium-scale industries through the bank's Industrial Technology Development Project.

According to a statement made available to The Jakarta Post over the weekend, the loan will mature in 17 years, including four years of grace, and bear the bank's standard variable interest rate.

The loan is meant to help firms in the manufacturing sector devise a common approach to survive competition from increased international liberalization in the Asia-Pacific Economic Cooperation (APEC) region, the global reduction of trade barriers and the emergence of a number of other low-wage competitor countries.

Indonesia continues to pursue economic deregulation and trade reforms while maintaining macroeconomic stability. The country's economy has grown at an average of seven percent each year since 1990.

Although restrictions on foreign direct investment have been largely eliminated to improve access to foreign technology, small and medium-scale industries need more assistance to help them adopt new technologies, improve existing production processes and develop new products, the statement said.

The development program will assist the government in making smaller firms in Indonesia more competitive through a bank strategy involving three components.

First, emphasis will be placed on improving industrial metrology, standards, testing and quality support systems. The first component also aims to improve the dissemination of industry standards to provide support for testing and calibration services, such as the ISO-9000 certification of product quality and quality management practices.

Second, a matching grant scheme will be set up to reduce the cost of buying technology-upgrading services from public research and development institutions, universities and the private sector.

Third, new initiatives and incentives will be provided to encourage the use of new technology in the private sector. (icn)