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Tag: loan

  • Vietnam targets credit growth of 14 pct in 2019

    Vietnam targets credit growth of 14 pct in 2019

    The State Bank of Vietnam targets credit growth of 14 percent this year, the same as last year. The focus of new loans would be priority sectors such as manufacturing, agriculture and small and medium enterprises, Nguyen Thi Hong, Deputy Governor of the central bank, said. Credit growth in the Vietnamese banking sector last year was 14 percent, the lowest rate since 2014.

    The figure announced by the State Bank of Vietnam (SBV) Monday was well short of the 17 percent targeted for the year.

    According to officials from the SBV’s Department of Credit for Economic Sectors, lending grew sharply in the early months of the year before tapering off. It was primarily targeted at priority sectors such as manufacturing and processing.

    Credit to the commercial and services sectors saw the highest growth rate, 16 percent. Lending to industry and construction grew by 12.1 percent and to agriculture, by 8.8 percent.

    Overall, interest rates remained steady despite rising interest rates in global markets. In Vietnam, interest rates are commonly around 6-9 percent a year for short-term and 9-11 percent a year for medium and long-term.

    The non-performing loans ratio was down to 1.89 percent from 1.99 percent in 2017 and 2.46 percent in 2016.

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  • Indonesian Consumers Face Harassment by Fintech Debt Collectors

    Indonesian Consumers Face Harassment by Fintech Debt Collectors

    As a result, she faces constant harassment by debt collectors who call her, wait outside her home, and even go as far as contacting her parents, family members, friends and acquaintances. “I was not expecting these fintech firms to subject their customers to such dreadful practices. They accessed my contact list and messages [on my mobile phone]. They even called my current bosses,” Cintia said.

    “My friends even told me that these fintech firms were defaming and harassing them, sending my friends’ personal photos to their bosses and some of the people in their contact lists, calling my friends imposters,” she added.

    The trouble started a few months ago after she borrowed Rp 1 million each from Uang Kita, Kantong Darurat and Perdana (previously known as Rupiah Plus).

    Risks Associated With Collateral-Free Loans

    Each fintech firm has a different set of requirements borrowers must meet, but most of them do not ask for any collateral, which comes with one major drawback: high interest rates.Despite customers only needing an identity card and a cellphone number to borrow emergency cash, these loans carry interest rates of 1 percent per day for a maximum tenor of 14 days. This exceeds by far the already steep interest rates of 29.9 percent per year that credit card companies charge their customers.

    Customers must also be prepared for some unpleasant treatment from these fintech firms if they fall behind on their repayments.

    “At first, I started borrowing money just for fun but I ended up with these debts and I’m making one debt to pay another debt. I want to pay it off in installments, but they refuse to accept it. They want me to settle the loans in full,” Cintia said.

    Misna Wati, who works for an undisclosed company in Jakarta, has owed money to 25 fintech firms since May last year. She said she regularly receives harassing phone calls and WhatsApp messages from debt collectors and representatives of the firms.

    “We are worried all the time. We did not expect them to be able to access our contacts, call logs, even messages,” said Misna, who declined to state her age and occupation.

    Misna and Cintia are now both seeking assistance from the Jakarta Legal Aid Institute (LBH).

    Need for Strong Data Protection

    With numerous reports about breaches of data privacy by the financial industry, the House of Representatives must accelerate the process involved in passing the data protection bill.The bill, which was supposed to be enacted last year, has now been included in the 2019 priority list of the National Legislation Program, which means that the House might deliberate it sometime this year.

    While Ministerial Regulation No. 20 of 2016 is intended to protects users’ personal data on the electronic system, it is deemed insufficient in preventing large-scale data breaches.

    The regulation only stipulates administrative penalties for violations or the settling of disputes between offenders and system providers or data owners, but does not allow for the recovery of damages related to customer data breaches.

    The bill, if it is passed into law, would apply both in Indonesia and abroad, but only to Indonesian citizens and Indonesia-based business entities.

    The regulation is very important as Indonesia has more than 143 million internet users, which is more than half of the country’s population, according to data compiled by the Internet Service Providers Association (APJII) in 2017.

    Fintech’s Popularity

    Fintech services have gained popularity in Indonesia over the past few years due to their seamless technology systems, innovation, customer-focused approach and simplicity. Fintech companies also offer payment systems, financial assistance and fundraising options.According to a joint study by global technology giant Google and Singaporean wealth fund Temasek, Indonesia’s internet economy – the financial value of all digital services – could exceed $100 billion by 2025, compared with $27 billion last year.

    But despite numerous benefits, the microcredit industry is still poorly regulated in Indonesia and the government is currently dealing with a rising number of illegal or unlicensed fintech firms operating in the country.

    The government banned 738 illegal financial technology websites and applications last year in a bid to protect consumers.

    As Indonesia is now one of the centers of the digital financial industry in the region, it attracts numerous companies from neighboring countries that establish a presence in the country, but which often choose not to obtain licenses from industry regulator, the Financial Services Authority (OJK).

    Most of the unlicensed fintech apps and websites are from China, Malaysia and Thailand. These fintech firms do not have registered offices, either in Indonesia or in their home countries.

    “The OJK has instructed us to ban unlicensed fintech websites and apps,” Ferdinandus Setu, acting head of public relations and communication at the Ministry of Communication and Information Technology, said in a statement last week.

    He said the ban so far applies to 211 websites and 527 smartphone apps, which seemed to have been increasing since August last year.

    There were 171 illegal fintech apps available for download on Google Play in November last year, compared with 144 in August. The ministry also recorded 77 illegal fintech websites in September.

    The ministry said no illegal fintech websites and apps were recorded between January and July last year.

    Ferdinandus said besides the OJK’s instruction, the communication ministry’s actions were also carried out after collecting public reports through a web crawler known as AIS, which filters out content deemed illegal under Indonesian law, such as pornography, the spreading of false news and the promotion of terrorism and radicalism.

    The ministry encouraged members of the public to report websites offering financial services that may be deemed illegal, or fintech companies that are not registered with the OJK.

    Reports can be submitted to aduankonten.id, or @aduankonten on Twitter. A task force comprising more than 13 ministries and agencies will investigate the reports.

  • Aeon Credit posts better earnings in third quarter

    Aeon Credit posts better earnings in third quarter

    Aeon Credit Service (M) Bhd’s net profit for the third quarter ended Nov 30, increased 23.5% to RM87.14 million from RM70.55 million a year ago, attributed to lower impairment loss on financing receivables. Revenue for the period increased 11.6% to RM348.5 million from RM312.35 million.

    For the nine-month period, the group reported a 22.62% rise in net profit to RM267.01 million from RM217.75 million. Revenue was up by 8.7% to RM1.01 billion from RM925.95 million.

    Aeon Credit told Bursa Malaysia that its gross financing receivables as at Nov 30 was RM8.31 billion, representing an increase of 15.41% from RM7.2 billion a year ago. Meanwhile, net financing receivables after impairment was RM7.74 billion compared with RM7.03 billion a year ago.

    Its non-performing loan ratio stood at 2.05% as at Nov 30, 2018 versus 2.48% as at Nov 30, 2017.

    Total transaction and financing volume in the current quarter and nine months ended Nov 30 increased by 49.5% to RM1.5 billion and by 26.4% to RM3.9 billion respectively.

  • Bukalapak Joins Hands With Tanamduit to Sell Mutual Funds Online

    Bukalapak Joins Hands With Tanamduit to Sell Mutual Funds Online

    E-commerce platform Bukalapak has partnered with online investment platform Tanamduit to introduce mutual fund products to first-time retail investors. The partnership will see local asset management firms Bahana TCW Investment Management, Batavia Prosperindo Asset Management and Sucorinvest Asset Management offer five new investment products, ranging from equity to fixed-income funds, on Bukalapak’s mutual funds platform BukaReksa.

    At its launch in January 2017, BukaReksa only featured money market fund products offered by CIMB Principal Asset Management and Mandiri Manajemen Investasi.

    But to capture a larger market, Bukalapak joined hands with finance marketplace Bareksa in December 2017, adding four more asset management firms, Kresna Asset Management, Syailendra Capital, Ciptadana Asset Management and BNP Paribas Investment Partners, to the platform

    BukaReksa now features nine asset management firms offering 21 investment products, compared with Bareksa, which has 31 asset management firms offering 160 investment products.

    “We hope our partnership with Tanamduit can boost financial literacy and investment in the country,” said Destya Danang Pradityo, head of payment and financial services at Bukalapak.

    Through the BukaReksa platform, customers can invest from as little as Rp 100,000 to Rp 1.5 million ($7-$104) in mutual funds.

    Destya said BukaReksa has at least 120,000 registered customers, with around half of them active investors from across the archipelago.

    “We believe online investment will become part of our lifestyles. Our collaboration with Bukalapak forms part of our mission to educate people on the benefits of investing,” said Muhammad Hanif, business development director at Tanamduit.

    With rapid technological development and the growth in online transactions, e-commerce players see opportunities to provide various services, including financial and investment products. This has seen the emergence of fintech startups offering mutual fund investment has been a trend over the past three years.

    Aside from Bukalapak, other online marketplaces also joined hands with Bareksa, such as Tokopedia, which in April this year launched Tokopedia Reksadana, offering mutual funds through local asset management firm Syailendra Capital.

    Another fintech startup, Invisee, has also been offering mutual fund products online in partnership with various asset management firms since last year.

    According to Halim Haryono, deputy director of investment supervision and development at the Financial Services Authority (OJK), the number of people investing in mutual funds increased 16.25 percent year-on-year to about 930,000 by October this year, due to the rise of online mutual fund marketplaces.

    Only about 400,000 people invested in mutual funds in 2016, Halim said.

  • Vietnamese banks report Jan-Sept rise in bad debts

    Vietnamese banks report Jan-Sept rise in bad debts

    Thirteen of 17 listed banks have seen their bad debts rise in the first 9 months of this year, according to banks’ financial reports. Experts blame this on recent credit growth, loose lending practices and accumulated old non-performing loans.

    Bad debts of VietinBank, the country’s second largest lender by assets, rose by 34.5 percent to nearly VND12.13 trillion ($519.82 million) in the first 9 months of this year.

    Group 5 debt, the worst category for potential loan losses, accounted for the largest proportion at 72 percent of the bank’s total bad debts. Group 5 debt was also the category with the biggest increase in the last 9 months, rising 68 percent to nearly VND8.74 trillion ($374.57 million).

    At BIDV, Vietnam’s biggest bank by assets, bad debts had totaled VND17 trillion ($728.65 million), a 21.1 percent increase over late 2017. However the bank’s bad debt ratio stood at 1.76 percent, well below the 3 percent danger limit set by the State Bank of Vietnam.

    The bad debt ratio of VPBank, meanwhile, rose to 4.7 percent by Q3, compared to 2017’s year-end figure of 3.39 percent. At the end of Q3, VPBank’s bad debt had increased by 52 percent compared to the beginning of the year, reaching VND9.4 trillion ($402.9 million)

    At Techcombank, total bad debt rose 33 percent between January and September, with Group 5 bad debt rising by 31 percent. Overall, the bad debt ratio on the bank’s loans rose to 2.05 percent from 1.61 percent at the beginning of the year. The bank’s bad debt is currently at VND3.43 trillion ($146.82 million).

    trillion VNDVietnamese banks’ bad debtas of September 201812.112.117179.49.43.43.4VietinbankBIDVVPBankTechcombank05101520BIDV● Bad debt: 17

    Banking expert Nguyen Tri Hieu said that the increase in bad debt was related to credit growth. New bad debt rises as banks increase lending and adopt looser lending practices, he said.

    The country’s credit growth in the first nine months of this year was 9.52 percent.

    Pham Hong Hai, CEO of HSBC Vietnam, said that from 2019 onwards, bad debt may re-emerge as a problem for banks after the recent credit growth and instability in global financial markets.

    State Bank of Vietnam Governor Le Minh Hung said recently that bad debts and potential bad debts of the sector amounted to 8.61 percent of total credit by the end of September.

    Vietnam’s banking sector posted an estimated 18.17 percent credit growth in 2017, according to the Ministry of Finance. It has targeted a credit growth of 17 percent this year.

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  • Vietcombank gains preliminary agreements to open US office

    Vietcombank gains preliminary agreements to open US office

    Vietcombank VCB.HM has made a significant step in becoming the first Vietnamese bank to open a representative office in the U.S. The move by Vietnam’s biggest bank by market value comes as diplomatic ties between Vietnam and the U.S. are on the rise and is part of a push to expand internationally as it aims for a place among the world’s top 300 banking and financial groups.

    Vietcombank has obtained approval from the U.S. Federal Reserve and an agreement in principle from the New York State Department of Financial Services to open a representative office in New York City, it said on its website.

    The State Bank of Vietnam, the country’s central bank, owns 77 percent of Vietcombank. Japan’s Mizuho Bank [MZFGAE.UL] is the second biggest investor with a 15 percent stake.

    “As Vietnam becomes more attractive to U.S. investors, Vietcombank’s representative office … will be an extended arm for Vietcombank in the U.S. to support business development in this very potential market,” it said, adding that it aims to obtain a license and open a New York office as soon as possible.

    The representative office would liaise with prospective clients and banks in the U.S. and engage in other non-transactional activities such as analysis of the banking and financial services market.

    The U.S. is now one of Vietnam’s top trading partners and is expected by some analysts to benefit from the continuing U.S.-China trade conflict, offering an alternative investment and trade destination.

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  • Thai’s KBank presses ahead with 2019 loan growth target of 5-7%

    Thai’s KBank presses ahead with 2019 loan growth target of 5-7%

    In the recently announced 2019 business plans, KASIKORNBANK (KBank) will press ahead to become the “Customers’ Life Platform of Choice” by using K PLUS to introduce financial and lifestyle services that suit individual clients. KBank’s financial and IT capabilities will be further enhanced through using data for decision making and steering business toward becoming a “Bank of Sustainability. The Bank has set 2019 loan growth target of 5-7%

    Mr. Banthoon Lamsam, Chairman of the Board of KBank, said that the Thai economy will likely post steady growth in 2019. Despite sagging demand abroad, domestic spending, buoyed by both public and private investments, may play a more important role in bolstering the Thai economic performance. It is expected the Thai GDP growth will reach 4.3 percent in 2019, which would be lower than the 4.6 percent pace projected for 2018 due to the slowdown in the export sector and tourism caused by the high 2018 base and the protracted US-China trade dispute that may dampen the global trade overall. Major drivers for the Thai economy in 2019 may include steady public infrastructure investment and the scheduled general election that will likely help reinvigorate investment climate overall while Thailand’s interest rates will be on the upward trend amid lofty household debt.

    Amid numerous challenges, KBank’s 2019 business operations will continue to focus on our “Customer Centricity” philosophy. With this mantra, we will press ahead with the “Customers’ Life Platform of Choice” strategy by using K PLUS, which has the highest number of users of any mobile banking applications in the country, to introduce financial and lifestyle services to meet the needs of individual customers. Our financial and IT capabilities will be enhanced further to allow KBank to be more responsive to every situation and become a data-driven bank, thus paving the way toward being a “Bank of Sustainability”.

    With regard to overall goals for 2019, KBank looks forward to achieving loan growth of 5-7%, which would be consistent with the 2019 economic growth, breaking down into corporate loan growth at 3-5%, SME loan growth at 2-4% and retail loan growth at 9-12%. We also set growth targets for our net interest margin (NIM) at 3.3-3.5%, and non-interest income growth at -5 to -7%. KBank’s NPL ratio is projected at 3.3-3.7%.

    Mr. Banthoon added that KBank continues to operate business, based on being a “Bank of Sustainability”, and under appropriate risk management and good governance. We are also building a balance in economic, social and environmental dimensions via strategies that will enable us to achieve and create sustainable returns over the long term. Such a sustainable development philosophy has been instilled in all of our operations until it becomes part of our corporate DNA, which has helped create maximum benefit for all stakeholders and promote sustainable growth to Thailand.

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  • Astra Sets Up Joint Venture With Hong Kong’s WeLab to Provide Loans to Indonesians

    Astra Sets Up Joint Venture With Hong Kong’s WeLab to Provide Loans to Indonesians

    Diversified Indonesian conglomerate Astra International has established a joint venture with Hong Kong-based technology company WeLab to provide financial products and loans to unbanked people, the company announced on Thursday (06/09).

    “We hope to expand our digital portfolio, while we also aim to further encourage financial inclusion in Indonesia. We continue to seek partners with the industry’s leading companies. We believe WeLab is at the forefront of fintech innovation.

    Through this partnership, we want to offer innovative solutions to provide benefits to consumers throughout Indonesia,” Astra International director Suparno Djasmin said in a statement.

    Astra subsidiary Sedaya Multi Investama and WeLab established a joint venture, Astra WeLab Digital Arta (AWDA), to give unbanked people access to loans.

    The joint venture, which uses big data analysis to better assess customers’ financial profiles, will offer loan products for retail consumers that can be accessed by smartphone, while also providing financial solutions to corporate customers.

    AWDA will launch its mobile application, Maucash, in the third quarter of this year to allow customers to apply for loans anytime and anywhere.

    The new entity sees massive potential in Indonesia’s fintech industry and seeks to capture the untapped potential.

    Supported by rapid growth in the adoption of smartphones, Indonesia recorded a 7.9 percent year-on-year increase in the number of internet users to 143.26 million last year, according to the Indonesian Internet Service Providers Association (APJII).

    An APJII survey showed that about 44.16 percent of respondents use smartphones to access the internet, while 30.28 percent do so with both computers and mobile phones and the remainder use computers only.

    “We believe our advanced technology, combined with Astra’s operational experience in the Indonesian market, can provide new experiences for consumers in Indonesia,” said Simon Loong, WeLab founder and chief executive.

    WeLab, founded in 2013, operates Woalaidai, one of the largest mobile credit delivery platforms in China. It also operates WeLend, an online loan platform in Hong Kong.

    The company also partners with traditional financial institutions that utilize WeLab technology to offer fintech-based solutions to their customers.

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  • India Reliance to borrow US$2.5 billion to refinance debt

    India Reliance to borrow US$2.5 billion to refinance debt

    Owned by India’s richest man Mukesh Ambani, Reliance is negotiating with more than a dozen banks to arrange the loans in single or multiple tranches as it rolls out an optical-fiber network and sets up more retail stores.

    This loans are to refinance existing offshore debt raised about two and a half years ago and would reduce average borrowing costs or extend maturities, the daily added.

    The conglomerate, whose interests range from petroleum to retail stores, has an ambitious plan to roll out its fixed-line broadband service Jio GigaFiber for 1,100 cities of India.

    Meanwhile India’s leading telecom service provider and Reliance rival Bharti Airtel is also looking to raise $1 billion overseas to refinance its high-cost debt.

    It wants to expand its fourth-generation (4G) mobile-phone technology network in order to face stiff competition posed by Reliance Jio.

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  • Vietnam bank loans up 6.16 pct in 5 months

    Vietnam bank loans up 6.16 pct in 5 months

    Bad debts accounted for 2.18 percent of total lending at the end of the first quarter of 2017.

    Vietnamese banks’ total loans at the end of May were 6.16 percent larger than at the end of 2017, the State Bank of Vietnam said on Monday.

    Bad debts accounted for 2.18 percent of total lending at the end of the first quarter, it said in a statement.

    Vietnam aims to keep toxic debts ratio under 3 percent of total loans, while the central bank has said it targets credit growth at 17 percent this year.

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  • Credit growth expected to rise 16.33% in 2017

    Credit growth expected to rise 16.33% in 2017

    The total loans of the banking system are expected to grow by 16.33 per cent in 2017 against December last year, lower than the Government’s limit of 18 per cent.

    The State Bank of Viet Nam released the information this week after conducting a survey on business performance trends of credit institutions in the second half of this year.

    The survey also shows that credit institutions forecast the total capital mobilisation of the banking system to rise 16.02 per cent in 2017, of which dong contributes to a rise of 16.59 per cent and foreign currency 1.14 per cent.

    The General Statistics Office (GSO) has reported that credit growth in the first half of this year was 7.54 per cent, the highest in the past six years. The new record, considerably higher than the previous record of 6.28 per cent set in 2015, reflects the market’s significantly improved capacity to absorb capital, the GSO said.

    Loans in the period were mainly focused on prioritised and large projects as instructed by the Government, accounting for roughly 50 per cent of total outstanding loans. Agriculture and rural industries, and small- and medium-sized firms received around 19 per cent and 22 per cent of the total outstanding loans, respectively.

    Lending interest rates were 6-9 per cent per year for short-term loans, and 9-11 per cent per year for medium- and long-term loans. For customers with transparent finances, short-term lending rates ranged from 4-5 per cent per year.

    The banking system’s capital mobilisation in H1 has risen by 5.89 per cent, and deposit interest rates have been relatively stable. Interest rates for dong deposits were 4.5-5.4 per cent per year for short term, 5.4-6.5 per cent per year for medium term, and 6.4-7.2 per cent per year for long-term deposits.

    The Government has targeted credit growth of 18 per cent for 2017, but at the National Assembly meeting recently, some deputies suggested that this limit be raised so as to support economic growth.

    Analysts at Bao Viet Securities (BVS) also recently forecast that the central bank may consider raising credit growth targets for several banks to aid economic growth.

    The Government has been under intense pressure to loosen its monetary policy as the country is determined to meet its GDP growth target of 6.7 per cent for 2017. However, the fiscal policy has been struggling with disbursement of public investment, the BVS analysts said in a report. By end of May, disbursement of public investments had touched VND88 trillion, equal to only 30.6 per cent of the entire year’s estimates.

    The BVS analysts said when fiscal policy does not support growth well, pressure will intensify on monetary policy. Increasing credit growth targets of several banks may be an option worth considering, the analysts said.

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  • BTN to launch micro housing loan by end of February

    BTN to launch micro housing loan by end of February

    State-run mortgage lender Bank Tabungan Negara (BTN) is expected to launch micro housing loan for lower income group by the end of Feb, its president director said.

    “We will launch it around end of this Feb. It is a special loan for lower income group who do not have regular income,” Maryono said at the Vice Presidential office here on Monday.

    According to Maryono, the lower income group includes those with regular income and those without. The first group enjoys the governments housing finance liquidity (FLPP) and interest rate subsidy.

    The group without regular earnings would be supported with micro housing loan to afford a house.

    The bank would impose interest rate as low as 7-9 percent, he said.

    Currently, some 6.3 million workers are categorized into lower income group, which include those who do not have regular earnings.

    Public Works and Housing Minister Basoeki Hadimuljono said that housing provision for lower income group is targeted to reach 700 thousand houses in 2017, up from 516 thousand in 2016.

    Basoeki added that the houses would be built at state properties, and access to the locations would also be improved to cut the transportation costs.

    The minister added that micro housing loan would be given to workers with monthly earnings from Rp1.2 million to Rp2.6 million.

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  • Thai farmers receive government loans to stabilize market prices

    Thai farmers receive government loans to stabilize market prices

    Thailand is the world’s second largest rice exporter, and it is confronted by a fall in prices that has mostly affected the rice farmers, with prices hitting a thirteen months low. Now the Thai Government has taken action and has proposed a set of measures with would help alleviate the pressure from the country’s rice farmers.

    According to Thailand’s Minister of Commerce Apiradee Tantraporn, rice farmers will receive 10,500 baht, or 299 US dollars, for every tonne of white paddy stored. The measure is aimed at all Thai farmers, with those who store Thai Pathum Thani fragrant rice to receive 11,300 baht, that is 322 US dollars, per tonne.

    “The overall budget is set at 18 billion baht ($514 million). This is to help relieve grievances farmers are facing while the main crop is being harvested,” Mrs. Apiradee Tantraporn told journalists.

    Last week, the government announced it would offer loans worth 1,3 billion US dollars to jasmine rice farmers, if they store the grain for at least six months to slow down market supply.

    Another measure the government has taken is easier access to open rice paddy markets. Mrs. Tantraporn said this is in order to boost competition among rice farmers and for their benefit, in the middle of this period’s price depression. According to state officials, in the province of Udon Thani’s retail centres and PTT gas stations, markets will be opened in the next weeks. Here the farmers will be allowed to sell their rice and negotiate the prices directly with the buyers, circumventing the need for intermediaries.

    Action is also taken in Lopburi and Sukhothai, where the government and other agencies have joined forces in order to promote and allow farmers to sell their rice directly. In Sukhothai, milled rice was on sale at up to 40% discount prices, while in Lopburi, the Si Sa Ket police was put together a market for farmers to sell the rice to their families and police staff.

    In total, there will be no less than  109 open markets organised in 44 provinces, all with the sole purpose to to help farmers sell rice paddy directly to consumers.

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  • World Bank approves loan for Indonesia`s logistics sector

    World Bank approves loan for Indonesia`s logistics sector

    The Executive Board of the World Bank has approved a US$400 million Development Policy Loan for the Indonesias Logistics Reform, which will be used to improve the countrys logistics system and connectivity.

    “These reforms will help Indonesia in achieving higher inclusive growth,” World Banks Country Director in Indonesia Rodrigo Chaves said in a statement received by ANTARA here on Thursday.

    Chaves explained the US$400 million loan will support Indonesia to overcome obstacles in the supply chain, such as dwelling time and trading permits.

    The inefficient dwelling time has resulted in Indonesias logistics costs accounting for 25 percent of the total costs, while Thailand is only 15 percent and Malaysia is 13 percent.

    Currently, the cost of container shipping of oranges from Shanghai, China to Jakarta is cheaper than the cost of similar items shipping from Jakarta to Padang, West Sumatra.

    Though, the distance between the two cities in Indonesia is only a sixth of the distance between Jakarta and Shanghai.

    “Logistics efficiency will improve connectivity and provide a significant impact on the competitiveness of the country. Improved logistics can reduce the cost of goods and services flows, especially in remote and underdeveloped regions in Indonesia,” Chaves said.

    The Development Policy Loan will support Indonesia over a transition period from the commodity-dependent economy to manufacturing-based economy with high competitiveness.

    World Banks Senior Economist Massimiliano Cali added that the high cost and unreliable logistics are obstacles in improving national competitiveness.

    “Managing these problems will increase production and export, thus lifting economic growth,” he said.

    The three main objectives of this funding is increasing the performance of the ports, improving the competitiveness of logistics services and strengthening trade facilitation.

    World Banks support for the logistics reform is an important part of the Partnership Framework of World Bank Group States, which is centered on the governments priority to bring significant changes.

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  • China’s Alibaba signs 5-year loan deal

    China’s Alibaba signs 5-year loan deal

    China’s Alibaba Group Holding Ltd  said it has signed a deal for a $3 billion five-year loan, which will help the e-commerce giant as it snaps up stakes in companies within China and overseas.

    Alibaba, led by founder Jack Ma, has been expanding in areas beyond its core e-commerce base, such as online video, as volume growth in its online shopping business slows.

    The firm said in a filing to the US Securities and Exchange Commission (SEC) that it had signed the syndicated loan deal with a group of eight lead arrangers. It added that the amount could increase if there was steep demand.

    “The loan, which is subject to upsize through over subscriptions in syndication, has a five-year bullet maturity and is priced at 110 basis points over LIBOR,” the company said in the filing, referring to the benchmark interest rate used by many global banks when making loans.

    Alibaba added that the loan would be used for “general corporate purposes”, without expanding on what this meant.

    The Wall Street Journal cited sources last month saying Alibaba was in talks with several banks to borrow up to $4 billion to fund expansion plans, including acquisitions.

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