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107111
Wed, 02/17/2010 - 15:52
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https://oananews.org//node/107111
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News Focus: BANKS, GOVT WANT FURTHER CREDIT EXPANSION TO FUEL GROWTH
By Andi Abdussalam
Jakarta, Feb 167 (ANTARA) - Both the banking community and the government now agree that a further credit expansion is essential to stimulate the real sector and boost economic growth, following the downturn in many countries, including Indonesia, as a consequence of the recent global financial crisis.
"Banks at home actually want the lowest possible lending rates to encourage businesses to borrow so that the economy this year can grow at a faster rate than last year," Pramukti Surjaudaja, chief commissioner of PT Bank OCBC NISP, said.
With low lending rates, companies would seek new bank credits and this indirectly would make it possible for the economy to reach the government's higher growth target this year. Therefore, the government is currently trying to encourage the distribution of more credits to the real sector to meet its industrial growth target.
"The amount of bank credits extended to the real sector so far has been too low and therefore we are trying to boost it to 20 percent," Industry Minister MS Hidayat said after a coordination meeting on economic affairs on Tuesday.
The credit hike target was higher than in 2009 which was 13 percent in line with the interest rate that had dropped to 11 percent - 12 percent from above 16 percent previously. "I have already talked with the banking community that nine percent interest will still be difficult to achieve in view of the cost structure like interest on deposits which is still high. So 11 percent is the most realistic figure," he said.
According to Pramukti Surjaudaja, the current average bank lending rate at 12 percent which had declined from the previous 18 percent is considered a stable rate. But the Indonesian Chamber of Commerce and Industry (Kadin) asked banks to further lower their credit interest rates to about 10 percent.
"We are optimistic that banks will be prepared to adjust their lending rates is they feel it is really necessary," the PT Bank OCBC NISP chief commissioner said.
After all, lowering bank lending rate will also lower banks' net interest margin (NIM) which has dropped to 0.15 percent. According to Bank Indonesia deputy governor Muliaman Hadad, the banks' NIM has dropped by 0.15 percent until the end of January 2010.
"The NIM slides from 6.23 percent earlier to 6.08 percent, or several basis points," he said recently. The drop occurred after private banks gave interests which were lower than the weeks' before.
"This happened because private banks started extending credits so that interests dropped," he said. However, Bank Indonesia would not intervene in connection with the margin between credit and deposit interests in the national banks.
Actually if lending starts again the NIM will drop by itself. The NIM in Indonesia usually stands between five and six percent while that in neighboring countries it is between three and four percent.
"There is no ideal NIM range. But what is clear is it is not something we are specializing. What is important for us is to push lending so that the NIM will drop," he said.
Muliaman said right now Bank Indonesia is focusing more on reducing credit interests although the bank until now had not discussed an agreement on interest reduction.
Minister MS Hidayat said the high lending rate remained a hurdle for industries and with increased distribution of credits he hoped industrial growth could reach 4.6 percent.
"We cannot as yet achieve five percent because our industry is moving backward and the year before it even grew just 1.7 percent," he said.
The problems of industrial development are not only internal but also involving other factors as well such as banking and economic cost. Thus, the Ministry of Industry would conduct further meeting with bankers including the central bank to discuss the issue.
"We will ask for support from the central bank and banking community," he said.
This is pat of the efforts to boost industry, particularly the manufacturing sector. The government plans to promote manufacturing sector to boost the country's economic growth which last year was only recorded at 4.5 percent.
"We must push manufacturing sector's development and also of course the real sector to increase employment," chief economic minister Hatta Radjasa said last week.
Sectors that could increase employment must be developed and so must their supporting institutions such as smallholder credit scheme (KUR). "This is all aimed at reducing the poverty rate and with that we also wish to create new employment," he said.
To make the economy to grow better than right now the government also will always promote investment by eradicating all hindrances and improving the infrastructure as well as revitalizing the industry.
"They are all for making our trade volume keep increasing and exports to grow. Downstream industries also have to be developed to increase the added value and boost employment," he said.***
Jakarta, Feb 167 (ANTARA) - Both the banking community and the government now agree that a further credit expansion is essential to stimulate the real sector and boost economic growth, following the downturn in many countries, including Indonesia, as a consequence of the recent global financial crisis.
"Banks at home actually want the lowest possible lending rates to encourage businesses to borrow so that the economy this year can grow at a faster rate than last year," Pramukti Surjaudaja, chief commissioner of PT Bank OCBC NISP, said.
With low lending rates, companies would seek new bank credits and this indirectly would make it possible for the economy to reach the government's higher growth target this year. Therefore, the government is currently trying to encourage the distribution of more credits to the real sector to meet its industrial growth target.
"The amount of bank credits extended to the real sector so far has been too low and therefore we are trying to boost it to 20 percent," Industry Minister MS Hidayat said after a coordination meeting on economic affairs on Tuesday.
The credit hike target was higher than in 2009 which was 13 percent in line with the interest rate that had dropped to 11 percent - 12 percent from above 16 percent previously. "I have already talked with the banking community that nine percent interest will still be difficult to achieve in view of the cost structure like interest on deposits which is still high. So 11 percent is the most realistic figure," he said.
According to Pramukti Surjaudaja, the current average bank lending rate at 12 percent which had declined from the previous 18 percent is considered a stable rate. But the Indonesian Chamber of Commerce and Industry (Kadin) asked banks to further lower their credit interest rates to about 10 percent.
"We are optimistic that banks will be prepared to adjust their lending rates is they feel it is really necessary," the PT Bank OCBC NISP chief commissioner said.
After all, lowering bank lending rate will also lower banks' net interest margin (NIM) which has dropped to 0.15 percent. According to Bank Indonesia deputy governor Muliaman Hadad, the banks' NIM has dropped by 0.15 percent until the end of January 2010.
"The NIM slides from 6.23 percent earlier to 6.08 percent, or several basis points," he said recently. The drop occurred after private banks gave interests which were lower than the weeks' before.
"This happened because private banks started extending credits so that interests dropped," he said. However, Bank Indonesia would not intervene in connection with the margin between credit and deposit interests in the national banks.
Actually if lending starts again the NIM will drop by itself. The NIM in Indonesia usually stands between five and six percent while that in neighboring countries it is between three and four percent.
"There is no ideal NIM range. But what is clear is it is not something we are specializing. What is important for us is to push lending so that the NIM will drop," he said.
Muliaman said right now Bank Indonesia is focusing more on reducing credit interests although the bank until now had not discussed an agreement on interest reduction.
Minister MS Hidayat said the high lending rate remained a hurdle for industries and with increased distribution of credits he hoped industrial growth could reach 4.6 percent.
"We cannot as yet achieve five percent because our industry is moving backward and the year before it even grew just 1.7 percent," he said.
The problems of industrial development are not only internal but also involving other factors as well such as banking and economic cost. Thus, the Ministry of Industry would conduct further meeting with bankers including the central bank to discuss the issue.
"We will ask for support from the central bank and banking community," he said.
This is pat of the efforts to boost industry, particularly the manufacturing sector. The government plans to promote manufacturing sector to boost the country's economic growth which last year was only recorded at 4.5 percent.
"We must push manufacturing sector's development and also of course the real sector to increase employment," chief economic minister Hatta Radjasa said last week.
Sectors that could increase employment must be developed and so must their supporting institutions such as smallholder credit scheme (KUR). "This is all aimed at reducing the poverty rate and with that we also wish to create new employment," he said.
To make the economy to grow better than right now the government also will always promote investment by eradicating all hindrances and improving the infrastructure as well as revitalizing the industry.
"They are all for making our trade volume keep increasing and exports to grow. Downstream industries also have to be developed to increase the added value and boost employment," he said.***
