Business

ICD to extend $157m of
loans in 2012

The Dubai-based Islamic Corporation for the Development of the Private Sector (ICD) says it will distribute US$157 million in sharia loans in 2012, comprising $17 million for three banks and $140 million for military uniform maker PT Sritex.

Director for the ICD’s financial institutions development department, Basel A. Al-Hag Issa, said ICD was still in discussions with some banks, but had yet to decide which banks would receive the $17 million loan.

Sritex corporate finance head Bintoro Dibyoseputro said that the $140 million loan, together with another $78 million from the company’s own capital, would be spent to establish a 65-hectare plant in Sukoharjo, Central Java, that would produce viscose fiber made of pulp.

“So far we have always imported viscose fiber from China, Taiwan and India,” he said.

Bintoro said a loan agreement would be signed by the end of November between Sritex and ICD.

“The plant construction will begin in early 2012 and will take two-and-a-half years for completion. In January 2014, we will do a trial test before going fully operation in the middle of the year,” he said.

The plant would be able to produce 80,000 tons of viscose fiber per year and would create 10,000 new jobs.

“However, from the total production, 25 percent would be supplied to other factories. Therefore, we still need to import 25 percent of the viscose fiber,” Bintoro said.

He said that the current plant, also in Sukoharjo, occupied 100 hectares and had 16,000 employees, or a total of 25,000 employees if they involved 9,000 employees from the plant’s surrounding area.

Annually, the plant produces 30 million uniform packs, including waterproof, fireproof, anti-insect and anti-infrared military outfits, which are exported to at least 27 countries, including Australia, Germany, Kuwait, the United Arab Emirates, the US and are also used by NATO.

Issa said that Indonesia was among the top 15 countries receiving loans from ICD from a total of 56 receiving countries members of the Organization of Islamic Cooperation (OIC). “The top five include Yemen, Uzbekistan, Azerbaijan and Mauritania,” he said.

Also on Monday, ICD signed a loan agreement of $25 million with PT Mandala Multifinance Tbk which has been the single receiver of ICD loans since it was launched in 2008. The firm received $8 million in November 2008.

Both loans would be used to purchase new motorcycles to be sold under the murabahah facility to MMF’s customers of small and medium enterprises (SMEs) in various sectors in Aceh, West Java, South Kalimantan and Sulawesi.

MMF is selling the motorcycles for prices agreed on between the firm and its customers that already have profits for MMF priced in.

“The $25 million is to purchase 25,000 motorcycles. We still think that motorcycles can help SMEs,” said MMF president director Harryjanto Lasmana. (fem)

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