Jakarta to unveil new measures to help its firms
INDONESIA will soon unveil new measures to allow struggling local companies to resume imports and boost exports.
And the government might turn to Singapore for help, Trade and Industry Minister Tunky Ariwibowo told reporters after meeting President Suharto yesterday.
He said Singapore would be able to help Indonesia by establishing “a consortium of companies and banks from many countries”. They would be able to support Bank Indonesia’s guarantees if it cannot fulfil its obligations.
Foreign companies exporting goods to Indonesia were nervous about accepting letters of credit issued in Indonesia following the 80 per cent plunge in the rupiah’s value, he added.
“While letters of credit (LC) by local banks have been guaranteed by the central bank, there are still problems,” he noted.
Observers said many foreign banks were concerned that some of the big banks were using customer deposits to cover other obligations and delaying LC payments.
Mr Tunky’s comments follow Singapore’s announcement of an initiative earlier this month to help Indonesia out of its crisis. It proposed a scheme involving several countries that would provide the central bank with up to US$20 billion (S$3.2 billion) in foreign guarantees.
Prime Minister Goh Chok Tong, who made the proposal during his meeting with President Suharto in Jakarta, said there were two ways to guarantee payment for Indonesian imports. One was for individual countries to provide guarantees to their own banks that exports to Indonesia would be paid for.
The other, he said, was for a multilateral forum which was “more flexible”. It would take longer to implement, but if only eight countries joined and put up US$1 billion each, there would be US$8 billion for Indonesian imports immediately.
“Of course, we hope that we can get something like US$20 billion,” he said.
Analysts believe this amount would be good for five months’ worth of imports.
Mr Tunky, stressing the importance of the measures, said yesterday that many Indonesian exporters relied on imported parts for production.
Many had used up all their supplies and could not afford more because of the crunch. “We will implement the new measures very soon, because the raw materials we need are running out,” he said.