Indonesia Eximbank press releases.
Surabaya, January 20th 2019 — Indonesia Eximbank, in its aim to boost national export, is mandated by the Indonesian government to provide financing, guarantees, and export insurance services in order to support national export programs (Law No. 2 Year 2009). One effort to execute this mandate comes in the form of the National Interest Account (NIA) program.
NIAs are special assignments given by the Indonesian government to provide export financing on projects that are commercially difficult to be executed, but deemed important by the government to facilitate policies and export programs. In 2018, in order to execute the mandate, the Indonesian Finance Ministry released the Decree of the Finance Ministry (Keputusan Menteri Keuangan) No. 513/KMK.08/2018 (an amendment to KMK No. 374/KMK.08/2017) concerning the Special Assignment to Provide Export Financing for Railroad Passenger Cars and Boxcars.
In her welcoming speech, Indonesia Eximbank Executive Director Sintha Roesly stated that the Decree signals another assignment from the Indonesian government for Indonesia Eximbank to provide export financing facilities to a business enterprise, one with the means and production capacity to produce passenger cars and boxcars to be exported to Bangladesh and Sri Lanka. The financing was provided through Indonesia Eximbank’s buyer’s credit services, in addition to its guarantees and insurance services, she added.
The NIA enables the Indonesian government, through Indonesia Eximbank, to market goods from national strategic industries to prospective foreign countries. The NIA is one of the Indonesian government’s support to the export sector in an effort to increase competitiveness among Indonesian exporters.
Indonesia Eximbank has once again provided financing using the NIA scheme to PT INKA (Persero), as one of its combined efforts with a strategic state-owned enterprise, in order to boost the Indonesian export scene. This financing of export working capital will be used to finance a project of 50 BG-type (Broad Gauge) passenger car trains and 200 MG-type (Meter Gauge) passenger car trains reserved by Bangladesh Railway, to be shipped to Bangladesh.
To execute on the mandate, Indonesia Eximbank has provided PT INKA with export working capital financing, amounting to a total of IDR 775,6 million.
The shipping of the first batch of the trains — 15 out of 200 trains were delivered in this shipment — is a concrete progress on the use of export working capital to support PT INKA’s business expansion to the international market, specifically prospective markets. All ensuing shipments will be conducted in phases, so that all trains may arrive at Bangladesh by 2020.
In 2016, Indonesia Eximbank has also provided PT INKA with NIA financing to produce 150 trains with a contract valued at USD 72,39 million.
This export of passenger car trains to Bangladesh has a strategic value to both PT INKA and the Indonesian strategic industry as a whole; the fact that PT INKA produced and maintained the quality of competitive goods is the key to succeed in global market competitions.
The success of PT INKA’s export to Bangladesh opens new doors of opportunities for other Indonesian business agents to enter and compete in prospective markets located in Asia and Africa.
Overall, this financing project has multiplier effects on the Indonesian economy, an effect that is limited not only to INKA but also to other large industries and small to medium-scale enterprises (SMEs) that pertain to the railway industry, such as the steel industry, casting foundries, the machinery industry, and the railway components industry. The project also has trickle down effects on many SMEs partnered with PT INKA.
Good and continuous cooperation among the Indonesian government, Indonesia Eximbank, strategic state-owned enterprises, and other export agents is especially vital in order to support national industry growth and to improve and develop future long-term export plans.