ASEAN KEY DESTINATIONS
Export financing agency aims for modest growth this year
The Indonesian Export Financing Agency (LPEI) is looking to “play it safe” this year by targeting to achieve a mere 10 percent growth given the current economic slowdown, its top executive has said.
“Bank Indonesia’s higher benchmark interest rates have increased our cost of funds and therefore, financing has become somewhat expensive for us,” LPEI finance director Basuki Setyadjid said on Tuesday.
The LPEI, also known as Indonesia Eximbank, was established in 2009. The agency is wholly owned by the government.
Basuki said that the government, through the Finance Ministry, had approved its 2014 business plan.
With the target, the agency’s total outstanding financing is estimated to reach around Rp 44.53 trillion (US$3.63 billion).
Basuki said that Indonesia’s traditional markets — such as China, India and the US — were expected to dominate its export destinations by around 80 percent from the current 60 percent, especially since those countries were showing economic improvements after a period of recession.
The rest of the exports will be made to nontraditional markets, such as African and Southeast Asian countries.
“The countries are increasingly important for our business,” he said.
“Surprisingly, our sarong products, instant noodle and snacks are in high demand in Africa.”
Myanmar is on LPEI’s “promising economies list” as well because businesses have begun to thrive in that country, according to Basuki.
So far, it markets crude palm oil and biomass-based electric technology to Myanmar.
This year, the LPEI is also looking to facilitate the purchase of a warship by the Timor Leste government.
The deal is part of a National Interest Account (NIA) between the two countries.
The government has previously stated that the NIA is a government policy that, despite being commercially nonviable, may help boost exports.
To fund its financing target in 2014, the LPEI plans to look for bank loans.
It may issue debt papers as well, provided that the market “is on the rise”, according to Basuki.
Meanwhile, LPEI’s unaudited financial report reveals that slowdown in the commodity sector did not significantly affect its business throughout 2013.
Its total financing jumped by almost 50 percent to Rp 40.48 trillion, which was also supported by the weakening rupiah.
All of its business segments recorded increases; industry, mining, agriculture, transportation and construction.
One of its major financing activities in 2013 involved the disbursement of a $22 million-worth import financing activity to a third party in Singapore.
LPEI took part in the financing of a nickel smelter owned by PT Sulawesi Mining Investment in Morowali, Central Sulawesi province, as well.
The smelter is being constructed in several stages and LPEI’s financing will reach about $50 million.
The financial report also shows that LPEI’s bottom line surged at a similar pace as its financing activities.
The net profits jumped 48.7 percent to Rp 870.64 billion.
As of December 2013, its total assets stood at Rp 46.45 trillion.
Its liabilities and equities amounted to Rp 38.14 trillion and Rp 8.31 trillion, respectively.
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