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||25 October 2009
JBIC offers $100m loan to Indonesia’s Eximbank
Indonesia has secured a US$100 million soft loan from Japan to finance exports, with Japan promising to disburse another $400 million later on, reported the Jakarta Post.
The $100 million loan is provided by the Japan Bank for International Cooperation (JBIC) to the Indonesia Eximbank, an agency specialized in boosting exports. The agreement was signed on Friday.
Eximbank, established in September, has a preliminary capital base of 4 trillion rupiah ($424 million), with the government planning to inject another 2 trillion rupiah next year.
The loan has an interest rate of LIBOR plus 230 basis points, meaning that exporters can borrow money at a rate of about 5 percent, while dollar-denominated loans in banks are available at about 7 percent, Eximbank Chief Executive Officer Mahendra Siregar told reporters. "The low interest rate will cut borrowing costs. Our debtors can get cheaper funds as opposed to borrowing money from conventional banks" he said.
Mahendra added that the 2 trillion rupiah injection next year would give Eximbank flexibility to provide cheaper rupiah-denominated loans, with an interest rate below 10 percent. Rupiah-denominated loans in banks are currently at 13 percent.
"These loans are aimed at supporting some key targets: Providing trade finance for exports, working capital for exporters to buy raw materials, or helping exporters to make investments by importing capital goods," he said.
"But the loans can also be given to potential buyers abroad so they can buy goods from Indonesia. We have the flexibility to lend money," he added. Mahendra also said Eximbank would focus support on micro-to -medium-sized exporters.
Trade Minister Mari Elka Pangestu said last month Eximbank would help diversify exports to non-traditional markets including the Middle East, Russia and Uzbekistan, expecting the share of exports to these markets to grow from about 3-4 percent to about 5-7 percent.
Indonesia has committed up to $2.5 billion to support trade financing globally as part of a G20 agreement to boost trade amid the global economic downturn. The amount of trade financing agreed by G20 countries in total is about $400 billion.
Apart from the $500 million from Japan, Indonesia is looking for trade financing from Australia, China and ASEAN countries said Mahendra. JBIC Head for Asia and Oceania Finance Deparment Nobuyuki Higashi said Japan would invest in sectors like electricity and geothermal energy in Indonesia.
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