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ADB approves $200m loan for Indonesia

MANILA: The Asian Development Bank said on Thursday it approved a $200 million loan for Indonesia to restructure its industry sector and open up opportunities for small and medium enterprises.

The programme for the industry sector intends to overhaul the complex and burdensome procedures for licences and approvals for domestic and foreign investors.

"By simplifying the regulatory system and sweeping away the major remaining barriers to entry, the programme lowers business costs and offers firms an environment of opportunity and challenge and a chance to make decisions with a minimum of interference," said Jaseem Ahmed, ADB senior economist on the project.

"This is the best way to support (small and medium enterprises), which is a flexible sector that will play a big role in expanding employment opportunities for the poor."

The ADB loan will come from the bank's ordinary capital resources. Interest will be determined according to the pool-based variable lending system for U.S. dollar loans.

The loan will be repayable in 15 years, including a grace period of three years, the bank said.

The ADB will also provide Indonesia two technical assistance grants totalling $3.5 million in relation to the industry restructuring.

MANILA: The Asian Development Bank (ADB) has approved a $25 million equity investment in a fund that aims to help small businesses in Thailand, a bank statement said on Thursday.

"The fund, which has a target size of $100 million, will invest in small- and medium-sized enterprises with promising businesses which are in need of expansion capital," it said in a statement.

The bank said Japan Bank for International Cooperation was also expected to approve an equity investment of $25 million in the fund, which would be known as the Thailand Small and Medium-size Enterprises Investment Restructuring Fund.

The remaining balance would be raised from institutional investors, including the State Street Global Advisors, the investment arm of State Street Bank and Trust Co.

The Manila-based ADB, a multilateral lending institution, said the fund formed part of its strategy to assist countries affected by the Asian currency crisis in 1997.

"As a result of the financial crisis, many intrinsically sound companies in Thailand, especially small- and medium-sized firms, face severe financial difficulties, including a shortage of working capital and unsustainable debt burdens," it said.

"The (fund) is expected to help restore investors' confidence in Thailand. It will also aim to reduce high debt-to-equity ratios of (small and medium enterprises) to a lower and more prudent level, enabling the banking system to extend credit or provide new loans."

In addition to the fund, the bank said it would invest in the Thailand Fund Management Co, which will manage the fund. State Street Global Advisors would also be shareholders.

The bank did not say how much equity it would invest in Thailand Fund Management Co.-Reuters