Indonesian Players Direct Loans to Distributors

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Indonesias Pertamina Lubricants and PT Shell Indonesia have established credit and payment agreements with domestic banks to strengthen distributors cash flow management and to spur sales.

Late last year, government-owned Pertamina Lubricants signed an agreement with two of the largest state-owned banks, Bank Mandiri and Bank Rakyat Indonesia, to help finance some of its more than 150 distributors.

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The agreement allows Pertamina Lubricants distributors to purchase Pertamina lube products with trust receipt loans or guaranteed payments. The loans will help distributors improve the effectiveness and efficiency of [their] financial management and basically simplify payment and purchase transactions, Corporate Secretary Arya Dwi Paramita told Lube Report Asia.

Distributors procurement, payment and settlement will be done in real-time, making settlements faster and cash management transparent.

It will improve the liquidity of distributors, hence increasing sales targets and their performance, Arya added. This is a strategy for Pertamina Lubricants to continue to grow its business and improve sales of lubricants.

Pertamina said the deal also aligns with the governments push to increase competitiveness. President Joko Widodosadministration has been encouraging state-owned enterprises to merge with other companies or consolidate management to increase efficiency and global competitiveness as it targets economic growth of about 6 percent in 2018. The government wants state-owned enterprises to lead the countrys economic development in various sectors such as oil and gas and infrastructure. It has urged government-owned companies to increase their investment target from last years 285 trillion rupiah (U.S. $21 billion) to Rp 450 trillion this year and Rp 895 trillion in 2018, aiming for an increase in the number of Indonesian companies on the Fortune Global 500 list.

In November, PT Shell Indonesia signed an agreement with publicly held PT Bank Danamon Indonesia arranging the latter to provide financing worth hundreds of billions of rupiah to some Shell distributors. The bank said it will help Shell distributors manage payments securely, ensure optimal flow of funds, and provide information technology for business management.

Declining to provide further detail, Dian Andyasuri, director of lubricants, PT Shell Indonesia, told Lube Report Asia, This flexi-loan facility offered by Danamon is expected to help our distributors in managing their cash flow and operational activities better.

Photo: ZUMA Press

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Distributing    Indonesia    Logistics & Distribution    Region    Southeast Asia