The International Finance Corporation (IFC) will cooperate with four regional banks to develop a warehouse receipt system (WRS), to help the agricultural sector access financial services.
Mochammad Aswad Bandie, an associate operations officer for IFC, the private investment arm of the World Bank, said Wednesday the cooperation with Bank Rakyat Indonesia (BRI), Bank Pembangunan Daerah Jawa Timur (BPD Jatim), Bank Pembangunan Daerah Jawa Tengah and Bank Pembangunan Daerah Jawa Barat would develop the WRS for corn in Makassar, South Sulawesi, and for unhusked and husked rice in Jombang, East Java, Semarang, Central Java and Indramayu, West Java.
"The WRS functions like a bank. You deposit certain commodities at the warehouse and in return you get a certificate explaining the quantity and quality of your deposit. This certification is transferable to other people or can be used to get loan from banks with the commodity serving as collateral," he said.
Any individual or corporate body within the agricultural sector may become a depositor. And like in any banking system, there will be supervisions to ensure the WRS works effectively. Indonesia has been committed to developing the system since the issuance of the law on the WRS in 2006, and government and Trade Ministry regulations in 2007, Mochammad said.
Eight commodities are included into the WRS, namely unhusked rice, husked rice, coffee, cacao, pepper, rubber, seaweeds and corn.
"So far only the agricultural produce that can be stored up to two years is included in the WRS," Mochammad said.
Another IFC associate operations officer, Donny Prasetya, said "*WRS farmer depositors* can use their deposit documents for bank loans. So they can get bank loans to finance their daily needs until they can sell their commodity on the market at a higher price," he said.
IFC's head of advisory services, Brigit S. Helms, said that IFC has been pursuing for cooperation with the Commodities Future Trading Regulatory Agency (COFTRA), under the Trade Ministry, to foster the development of the WRS in Indonesia.
She said that as part of the cooperation, the IFC and COFTRA have recently conducted WRS inspection training in the US, where most agricultural products are certified.
Source: The Jakarta Post (17/09/2009)