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)