BEI to become export credit agency: Minister

The Jakarta Post, Jakarta

The government says it will convert the state-owned export bank, Indonesian Export Bank (BEI), into a fully fledged export credit agency, to improve financing for the country's exports.

The Indonesian Export Bank (BEI) will be transformed into the Indonesian Export Financing Agency (LPEI), and operate under a new law drawn up specifically to regulate its function.

A draft of the law has been submitted by the government to legislators for deliberation, Finance Minister Sri Mulyani Indrawati said Thursday.

As a financing company, the government says the new agency will be able to move more freely in disbursing export-related loans. By comparison, the BEI as a commercial bank has been constrained by strict banking industry regulations.

These regulations include limits on maximum lending, as well as prohibitions on export-related insurance schemes and loans to foreign-based importers.

"Such constraints left the BEI unable to fully play its role like the export credit agencies and export-import banks in other countries," Sri Mulyani was quoted as saying by Antara at a discussion.

"BEI has operated as an ordinary commercial bank, when it has specific functions to finance export activities, so that's why it has to be upgraded."

With its new role under a new law, the LPEI is expected to be able to provide services the BEI could not, including consultancy services for exporters.

Sri Mulyani promised the new financing agency would maintain best practices of prudence, transparency and accountability.

BEI president Arifin Indra said the lender's transformation would oblige it to seek other funds from the public besides savings and time deposits.

The LPEI's initial seed capital will be provided from the state budget, he said. More funds will be raised from a bond issue and loans from bilateral and multilateral financial institutions.

"The LPEI will be a new fiscal instrument for the government to support more exports," he said.