Indonesia Eximbank CEO: Everything Needs to be Maintained
19 October 2018 22:04 WIB
Indonesia’s recent current account deficit has been a challenge for a number of financial institutions that rely on exports, one of which includes the Indonesian Export Financing Agency (LPEI), or Indonesia Eximbank. However, the state-owned financing agency is still optimistic that it will be able to move forward despite cutting back on the growth of exports.
In order to ascertain how this institution plans to face the uncertain economic condition, Indonesia Eximbank CEO and chairman I Made Gde Erata was willing to have a chat with Tempo’s R.R. Ariyani and Linda Hairani. Excerpts from the interview:
At a time like this, where the value of the Indonesian rupiah has plummeted, are there any signs of delayed financing loans?
Our direct export financing programs lean more toward commodities. The price of commodities has not dropped recently, and some have already recovered. The performance decline of manufacturers did not really have an impact on us because most of our contracts are long-term contracts.
The largest sector we’re currently handling is the textile sector. However, lately they have also served long-term (projects), especially for the middle to upper class garment sector. Textile financing provides services for military uniform manufacturing factories and tire threads, which still have good prospects because long-term exports and investments are for production.
Can you describe the company’s performance growth up until the third quarter this year?
Based on our report per September 13, our growth marked a total asset value of Rp44.6 trillion. Meanwhile, financing and account receivables reached Rp34.2 trillion. Assets totaled Rp44.6 trillion, financing Rp34.2 trillion, collateral Rp1.6 trillion, and insurance Rp242 billion.
Are the non-performing loans (NPL) from small to medium enterprises (SMEs) substantial enough?
We just entered the SME market, so the NPL and funding is not that great. The net NPL is at 1.79 percent. There was actually a chance to lower the interest rate recently near the halt of quantitative easing, yet it has been sustained at 5.6 percent since December 2011.
What about SME financing?
It is currently still at 2.7 percent. We would like to concentrate on financing to control the exporters, then gradually for SMEs. There are three ways to develop SMEs, which are linkages to exporter corporationsand infrastructure, direct contact with export oriented SMEs, and refinancing of exporters that have obtained loans from other banks.
LPEI’s goal is to boost exports. During a crisis like this, what can be done?
Actually, the establishment of LPEI was aimed at filling in the blanks, which are services that public banks could not provide so non-bankable exporters can still apply for a loan.
Our expansion abroad includes Singapore, Australia, Virginia, and Chicago. LPEI also helped export supplies for regions in non-traditional countries. Aside from needing financing loans, they need insurance. LPEI’s duty is to provide both. We helped our friends construct, such as Al-Masjid Al-Haram (The Sacred Mosque in Mecca, Saudi Arabia), then the onshore gas pipelines in Malaysia, Timor Leste and Azerbaijan.
We also guarantee independent investments by our businessmen overseas.
How do you view the company’s performance from 2009 to 2013?
We are now focusing on keeping the growth from increasing too much because we are afraid our friends will not be able to accommodate. In the end, our risk becomes too high. Everything needs to be maintained.
Why are you attempting to keep the growth from increasing too much?
The ability to amass funds also comes from our ability to maintain the minimum capital ratio. This also relies on our equity, which is domestically mostly derived from bonds.
These bonds must also be viewed based on our abilities because the funds are derived from the rupiah. Now the SBI (Bank Indonesia Certificate) rate is already at 7.25 percent. Before the BI rate increased, we received around Rp3.8 trillion. We recently obtained a syndicate loan worth US$500 million, with an interest rate of below two percent, during a road show to Singapore, Taiwan and Japan. (*)
