HIPMI WELCOMES BI'S PLAN TO CHANGE BANK RESERVE REQUIREMENTS

Jakarta, Jan 9 (ANTARA) - The Association of Indonesian Young Businessmen (HIPMI) welcomed the central bank's plan to implement reserve requirements (GWM) to boost extension of credits.

"We welcome it because it will promote the realization of banking credits. However, there must also be an assurance that demand for credit will also increase," the association's chairman, Erwin Aksa, said in a press statement issued on Saturday.

Erwin said Bank Indonesia (BI) must ensure that the increasing liquidity and relaxation of rules would encourage banks to also cut their lending rates.
"If they don't, the central bank's effort will be useless because then bank liquidity will again go into SBIs (Bank Indonesia Certificates) or other securities," he said.

Erwin hoped the implementation of the requirement would lead to reduction in the capital cost that businesses could enjoy through bank credits.

He said HIPMI also hoped the requirement would spur realization of credits for infrastructure and smallholders.

To make Indonesia not hurt with regard to the implementation of the Asean-China Free Trade Agreement realization of credits for infrastructure must be expedited.

"Until the end of 2009, realization of infrastructure credits was the lowest in all banks. The implementation of the GWM must be able to speed up extension of credits. With the limited infrastructure facilities it is impossible for businessmen to be able to stand against onslaughts from Chinese products," he said.

HIPMI saw the increasing undisbursed loans this year as resulting from businessmen who did not withdraw their credits.

"This is because BI and the government have taken no concrete steps to boost demand by optimizing realization of state budgets or boosting infrastructure development," he said.

HIPMI hoped the implementation of the GWM could solve the businessmen's problems immediately, which is important because there are potentials for inflation and the negative impact of the implementation of the Asean-China Free Trade to happen in the second semester this year.

According to BI in October 2009, the undisbursed loans in banks reached Rp279 trillion rising 13.5 percent from October 2008 recorded at Rp246 trillion.

"It must be watched closely because the realization of credits to trade has been the lowest while infrastruture is low. How Indonesia could enter the Asean-China Free Trade if realization of trade is low while the central issue of the Asean-China Free Trade are trade and industry," he said.

HIPMI secretary general M Ridwan Mustofa hoped the GWM could increase loans to particularly smallholders.

He also hoped the government would immediately realize the addition of guarantee funds for smallholders.

He said there were impressions that the KUR (smallholders' credit scheme) had been forgotten. "Do not let the KUR be forgotten. Micro-businesses need to be strengthened to face the Asean-China Free Trade," he said.