Fund guarantors may manage surety bond

JAKARTA: Capital market watchdog (Bapepam-LK) is considering the fund guarantors to expand their business into surety bond, which has been part of insurance companies' business.Fund guarantors are also allowed to handle six other business segments, as stated in the revised draft of Finance Minister's Regulation No. 222/PMK.010/2008, which was released last week.The supervisory agency plans to revise the old regulation on Credit Guarantor and Credit Re-guarantor.Discussion on the regulation is almost finished, the process is about 80% completed. The revision considers two things, i.e. too high capital and limited business segment, Head of Legal Department at Bapepam-LK Togar Sinaga said.Other than surety bond, fund guarantors will be able to secure bond, trade transaction, local letter of credit, letter of credit (L/C), counter bank guarantee, and custom bond.The revised regulation will reduce the minimum paid-in capital of re-guarantor to IDR200 billion from IDR1 trillion, and to IDR25 billion from IDR50 billion for provincial re-guarantor.Adding to minimum capital requirement, other provisions to be changed is on ratio of total credit or financing to companys own capital, known as gearing ratio (GR), to 40 times.Previously, the old regulation states that GR for productive business is not more than 10 times and 50 times for non-productive business. Meanwhile, the new regulation states the same calculation for productive business.Usaha produktif merupakan segmen usaha yang dijamin perusahaan penjaminan atau penjaminan ulang yang segmen usahanya dapat memberikan pemasukan lebih bagi pelaku sehingga sifatnya produktif, misalnya segmen usaha UMKM dan konstruksi. Segmen nonproduktif adalah yang biasanya dikategorikan sebagai segmen usaha multiguna.Productive business is a segment guaranteed by guarantor and re-guarantors that the segment gives larger income so it is considered productive, for example, micro, small and medium businesses, and construction. Non-productive segment is multipurpose business.More instrumentsApart from business segments, the revised draft will add investment instruments not limited to deposits, traded securities and direct placements. At the same time, more investment instruments will bound the portion of each investment product.The coverage of insurance companies in guarantee segment is a normal practice that happens anywhere in the world, not only in Indonesia.Bapepam-LK has given permitto other guarantors to enter certain business segments, including securing bonds, trade transaction and counter bank guarantee. Meanwhile, surety bond, securing letter of credit and customs bond are new lines for guarantors, said President Director PT Jamkrindo Nahid Hudaya.He thought that the terms on restrcited GR is not worrying since companies have predicted the current condition, and it is not too critical. (T04/NOM)