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IFC ESTABLISHES TRADE FINANCE FACILITIES IN INDONESIA TO STIMULATE TRADE FLOW RECOVERY


L. Joseph
Phone:  (202) 473-7700

Fax:      (202) 974-4384

E-mail:  ljoseph@ifc.org


JAKARTA, INDONESIA, February 16, 2001—The International Finance Corporation will help stimulate recovery in Indonesia's international trade flows through two new trade finance facilities that will provide short-term financing to private sector Indonesian importers.

Three years into the Asian economic crisis, Indonesian businesses still have little access to trade finance from the local banking sector and international banks offer very limited letter of credit confirmation facilities to local commercial banks.  The two new five-year revolving trade finance facilities will help mitigate this situation by providing additional letter of credit confirmation lines to selected local commercial banks.


The two facilities are with Standard Chartered Bank and Sumitomo Bank.  Each is for US$125 million.  Under each facility, IFC will guarantee 40 percent of each transaction up to $50 million.  Standard Chartered Bank and Sumitomo Bank will act as the confirming banks and will take 60 percent of the risk in each transaction.


The Government of Japan provided technical assistance funding in designing the facility structure, drafting of the necessary legal documentations, and broad promotion of the facility to other Indonesian corporate clients, external banks, and multilateral as well as bilateral institutions.


Standard Chartered Bank is a leading international commercial bank in Asia and a top provider of correspondent banking and trade services in Indonesia.  Sumitomo Bank, one of Japan’s premier banks, is also a top provider of trade finance to Indonesia.


Mr. Peter Woicke, IFC Executive Vice President, said the facilities will expedite recovery of foreign trade and spur economic growth by enhancing import financing of essential industrial and manufacturing inputs.  The investments will build confidence in the banking sector and, through them, IFC can reach many businesses in Indonesia.  IFC is also considering participation in other projects that will help strengthen Indonesia’s economy and restore investor confidence, he added.


The mission of IFC, part of the World Bank Group, is to promote sustainable private sector investment in developing countries as a way to reduce poverty and improve people’s lives.  IFC finances private sector investments in the developing world, mobilizes capital in the international financial markets, and provides technical assistance and advice to governments and businesses.