From Government of Indonesia

$2.8 bn in Loans for Bio-fuel

Five Indonesian state-owned and regional banks have been tasked to lend $2.8 billion next year to help develop bio-fuel projects and revitalize the country's plantation sector, Dow Jones Newswires reported.

PT Bank Mandiri, the nation's largest bank by assets, PT Bank Rakyat Indonesia, the fourth-largest lender, PT Bank Bukopin, and two regional banks, PT Bank Pembangunan Daerah Sumut and PT Bank Pembangunan Daerah Sumbar, on Wednesday signed an agreement with the government to offer loans to farmers and businessmen interested in developing bio-fuel projects.

Finance Minister Sri Mulyani Indrawati said the projects could increase the banks' ratio of loans to deposits next year.

"The Indonesian banks have so far been conservative in lending. I hope that the bio-fuel projects will improve the banks' lending performance," she added.

Indrawati said the government will provide as much as Rp1 trillion to help cover the interest cost that the farmers and businessmen need to pay to the banks.

She said the maximum interest rate for the loans is set at 10% and half of the interest cost will be subsidized by the government.

The loans will also be used to revitalize the plantation sector to ensure the supply of commodities for bio-fuel purposes, she said.
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