JAKARTA (TheInsiderStories) – The Indonesian Export Financing Agency (Eximbank) received funding with a total value of US$580 million from China Eximbank and PT Bank ICBC Indonesia, said the company yesterday. The lender is 100 percent owned by the government whose capital is not divided into shares.
The term loan facility from China Eximbank worth of $200 million with a three-years tenure and Bank ICBC of $380 million have period three and five years. Chairman of the state firm, Daniel James Rompas, said that 50 percent of the loans will be used to support exporters’ working capital financing needs with a priority on the facilitate trade, investment and infrastructure between Indonesia and China.
“This loan facility is also a form of trust from international financial institutions to us to support the foreign trade activities,” he said in a statement.
As the government armed, the lender provide national export financing for business entities, including individuals domiciled in and outside of Indonesia. The Eximbank‘ initial capital is set at at least Rp4 trillion that separated and not divided into shares.
Recently, the government through Eximbank and Infrastructure Guarantee Fund has providing support for corporations involved in labor-intensive projects in the form of working capital loans. The working capital credit guarantee scheme will be given to credit with a ceiling of Rp10 Billion to Rp1 Trillion and is targeted to create Rp100 trillion working capital Credit until 2021.
According to senior economic minister, Airlangga Hartarto, the corporate guarantee in the framework of National Economic Recovery Program (ERP). He added, the implementation of this program was carried out through modalities for Placement of Funds to Banking, Guaranteed Working Capital Loans, Participation of State Capital, Government Investment, and support for state expenditure.
The company is regulated by Law Number 2 of 2009, which establishes the role of entity policy, legal status, supervision, dividend policy, and options for capital injection. This means that the bank is not subject to the state bankruptcy law, and can only be dissolved by the Special Parliamentary Act.
As planned, the government will inject another Rp5 trillion in this year, although part of it will be offset by a one-time increase in loan-loss provisions. The Eximbank’ liquidity improved marginally in 2019, helped by debt refinancing, a shrinking loan book and the capital infusion.
While, the bank remains susceptible to external market conditions as a result of its reliance on wholesale funding, refinancing risks are somewhat mitigated by its quasi-sovereign status. The lender focuses on the business of providing export financing to business entities in the form of legal entities and not in the form of legal entities, including individuals who are domiciled in and outside the country.
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