Tue, 27 Oct 2009
From: Antara News
By Banks need to be involved in revitalizing industries
Faisal Basri (ANTARA/Prasetyo Utomo/*)
Jakarta (ANTARA News) - Banks need to be involved in the revitalization of industries because financing from the state budget alone is not enough, an economist said.

"In essence, revitalization funds from the state budget amounting to Rp350 billion are too small, only enough for the construction of several kilometers of toll roads," Faisal Basri of the University of Indonesia (UI) said here on Monday.

He said the industrial revitalization funds from the state budget were of course needed to build small industries but the revitalization of industries as a whole needed a large funds.

Therefore, revitalization of industries needed the involvement of banks with large funding support. "In the past banking support reached 40 percent, but no it was only about 14 percent," Basri said.

He said that industries would develop well if they obtained smooth access to banks for better financing.

"Bank credit expansion has begun last June but the government and Bank Indonesia (BI, the central bank) have issued polices which are not favorable ," he said.

He said that the government had drawn much credits from the public but spent them too tightly so that the fund circulation lacked transparency. In the meantime, the money policy was still tight as it was proven from the negative growth of the money in circulation.

"This causes high interest rates. In this case, there should be a good coordination between the fiscal and monetary authorities," he said.

With regard to the direction of industrial development, he said that the upstream and downstream industries must be developed in tandem. (*)



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