ASEAN KEY DESTINATIONS
LPEI to see higher export financing with weakening rupiah
The Indonesian Export Financing Agency (LPEI), also known as Indonesia Eximbank, expects to channel higher financing in 2015 as the weakening rupiah is estimated to boost exporters’ performance.
LPEI finance director Basuki Setyadjid acknowledged that the agency stood to gain a windfall from the depreciation of the rupiah. “We may see rising exports because a weaker rupiah will help make exports cheaper,” he said.
He added that the slowdown in some economies, including China, would not severely affect its exporter clients because some of their exports were dedicated to consumer goods-related sectors.
“Demands are still there for consumer goods, represented by our top 10 commodities. That’s why we believe that our clients’ exports will continue to grow,” Basuki said on Tuesday.
According to data from the LPEI, the top 10 commodities — crude palm oil, textiles, rubber, coffee, food products, construction services, cocoa, fish, shrimp and footwear — made up for almost half of its financing portfolio.
In terms of sectors, manufacturing accounts for more than 40 percent of financing, followed by others with 15 percent, mining with 11 percent and agriculture with 10 percent.
The data also shows that 57 percent of financing is disbursed in foreign currencies and the rest in the rupiah. Its major export destinations remain the US, Europe, China and Japan.
However, destinations such as India, Africa and the Middle East have gained more prominence among the LPEI’s clients in the past few years. These markets, according to Basuki, offset the slowdown in China.
Meanwhile, according to the latest Jakarta Interbank Spot Dollar Rate (JISDOR) from Bank Indonesia, the rupiah has so far depreciated by 4.4 percent to 12,720 against the US dollar since the beginning of the year.
Basuki said the agency might revise next year’s targets due to lingering volatility in foreign exchange, even though it had already finished drafting its 2015 business plan.
For 2015, the LPEI — which is wholly owned by the government — has set a target of a 20 to 22 percent increase in terms of assets and financing, and an 18 to 20 percent rise in net profits.
With such targets, it is looking to post at least Rp 72 trillion (US$5.66 billion) in total assets, Rp 62.4 trillion in outstanding financing and Rp 1.18 trillion net profits.
To help finance the target, it plans on holding another bonds issuance next year. It will be able to generate Rp 8 trillion from debt papers in 2015 as part of its continuous bond offering plan, which will expire in 2016.
“However, we will analyze the market situation first, whether or not it will be feasible for us to issue the bonds,” Basuki said.
Meanwhile, the LPEI expects to book a total of Rp 52 trillion in outstanding financing by year-end, followed by Rp 1 trillion in net profits. It has already posted Rp 48.76 trillion in financing and Rp 774.73 billion in profits during the first nine months of 2014.
Rating agency Moody’s Investors Service announced on Wednesday that it had affirmed the LPEI’s Baa3 long-term local currency and foreign currency issuer and foreign currency senior unsecured bond ratings.
The affirmation of Indonesia Eximbank’s Baa3 ratings reflected the bank’s strong relationship with the government and its ownership structure, clear policy role as an export credit agency and quasi-sovereign status as per its legal mandate, it said in a statement.
“Furthermore, the legal mandate that established the bank incorporates strong support language regarding capital, funding and liquidity support from the government. As a result, LPEI’s Baa3 rating is in line with the Indonesian government sovereign rating of Baa3 with its stable outlook,” the statement read.
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