Ngalim Sawega, Chairman and Executive Director, Indonesia Eximbank: Interview

Ngalim Sawega, Chairman and Executive Director, Indonesia Eximbank

Interview: Ngalim Sawega

How does Eximbank assist Indonesian exports?

NGALIM SAWEGA: In 2014 the credit banked by Indonesian exports in the banking industry grew modestly, despite exports decreasing due to weak demand in the global market and the decline of commodity prices. Indonesia Eximbank commits to supporting national exports through continuously implementing financing, guarantees and insurance facilities. Our financing grew by 36% on 2013 to amount to Rp55.2trn ($4.56bn), while export guarantees and export insurance have reached Rp3.6trn ($297.6m) and Rp701.6bn ($58m), equating to growths of 79% and 168%, respectively. Eximbank’s target for export financing amounts to 20% year-on-year, while the targets for export guarantee and export insurance are 25% and 35%, respectively.

Furthermore, Indonesia Eximbank assists exports secondarily through export-related industries ( infrastructure, energy, and transportation); the main export commodities (crude palm oil, rubber, etc); the value-added industries; import substitution; small and medium-sized enterprises; and the government-initiated National Interest Account. Indonesia Eximbank also has many overseas projects, targeting Australia, the Netherlands, Singapore and other countries.

What has been the government’s role in supporting the financing capabilities, export facilitation and promotion of Indonesian banks?

SAWEGA: In 2014, the value of Indonesia’s exports reached $176bn, a contraction of 3.43% from 2013. With the value of imports at $178bn, Indonesia had a deficit of $1.9bn. This deficit was due to weaker global demand and low commodity prices, and it was not as deep as in 2013, when it stood at $4.1bn.

In the next five years, the Ministry of Trade is aiming for a 300% increase in non-oil exports. The aim takes into account both goods and services. The Indonesian government wants to reduce pressure on the trade balance. The government strategy to achieve this goal has been to ensure the availability of raw materials for suppliers of industrial energy, develop the infrastructure to support exports and improve logistics to include storage, distribution, terminal handling and shipping. The plan seeks to facilitate licensing procedures and create a more attractive investment climate by improving labour and supporting productivity. It aims to make export targets a national commitment, involving stakeholders from both the government and the private sector in encouraging the export of manufactured goods, which are in great demand globally.

In line with the government strategy, one way of supporting the financing capabilities of Indonesia Eximbank is by providing capital injection. Indonesia Eximbank is 100% owned by the government of Indonesia, and has received capital injections in 2010 and 2014. In 2015, the government budget has also allocated additional capital to Indonesia Eximbank.

Furthermore, it is understandable why many Indonesian firms remain focused on the domestic market, as it remains solid and manages to consistently maintain high growth rates, even while the global economic recovery has been slow. However, with the government’s commitments to encourage exports, and President Joko Widodo’s maritime and infrastructure improvement plan, Indonesian companies are expected to increase their market share overseas.

Where are the opportunities for Indonesian firms to expand their operations overseas?

SAWEGA: Indonesian agencies supporting state-owned construction overseas have grown in the past several years, particularly in the Middle East, East Timor and nearby ASEAN member countries. In the case of Indonesia Eximbank, we have supported some state-owned construction developments like the Grand Mosque expansion project in Saudi Arabia and the Suai Airport development in East Timor. Indonesia Eximbank is also supporting three other major projects in East Timor: the construction of the Finance Ministry Building in Dili, the Liquica Mota Ain-Dili road, and a Tibar-Glen road.

Anchor text: 
Ngalim Sawega

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The Report: Indonesia 2015

Trade & Investment chapter from The Report: Indonesia 2015

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