|January 26, 2008|
The LPEI can also do its job based on a sharia financial system to lure investors from Islamic countries, such as the Islamic Development Bank, which has invested money in Indonesia since 1976,” said Mulyani. Indonesia, the world’s largest Muslim country, is considered a potential market for sharia-based banking and financing.
The vice chairman of the House’s special committee on the LPEI draft law, Hasto Kristianto, said Friday that with the LPEI’s establishment, exporters will be more willing to invest in foreign countries.
Govt proposes new agency to help bolster exports Business News – Saturday, January 26, 2008
The Jakarta Post, Jakarta
To help improve foreign trade, the government has proposed the establishment of an agency to provide financing, underwriting and insurance to exporters.
The agency, called the Indonesian Exports Financing Agency (LPEI), will replace Bank Ekspor Indonesia, which was established in 1999 to bolster exports, Finance Minister Sri Mulyani Indrawati said recently.
“The government feels that Bank Ekspor cannot fully support the country’s exports because it also operates as a regular bank, which must follow banking regulations,” she said.
Under the draft law submitted to the House of Representatives last week, the LPEI is expected to act as a special body that will not follow the regulations on state-owned enterprises, financial companies or institutions, insurance companies and the banking sector.
“The LPEI will have a sovereign status and be treated as a government agency so that it can fill the market gap that is not covered by commercial banks or financial institutions,” said Sri Mulyani.
The LPEI, she said, would support the government’s programs relating to exports and would be responsible for all associated risks.
To establish the LPEI, the government will need at least Rp 4 trillion (about US$428.72 million), which will be derived from Bank Ekspor’s assets.
As of the end of 2007, Bank Ekspor was worth Rp 10.1 trillion, according to the bank’s president director, Arifin Indra.
In the draft, the LPEI is allowed to look for funds from bond issuances; in various loan terms from the Indonesian government, foreign governments, multilateral institutions, domestic and foreign banks; and grants.
The government is optimistic that the LPEI will benefit exporters as it will be able to provide financial aid and insurance facilities for short-funded exporters who are regarded as being engine’s of the country’s economic growth.
Hasto said Indonesian exporters would be less hesitant to engage in trading activities with importers from “high-risk” countries as the LPEI could cover the risks.
However, Hasto said the government needed to insert its calculations on the benefits of the LPEI before the House could endorse it.
“We wanted to know how much the state will benefit from the LPEI’s establishment, compared to the existing situation with Bank Ekspor,” he said.
The deliberation of the draft law, he said, would be completed by June at the latest. (adt)