Aditya Suharmoko, The Jakarta Post/Jakarta
Despite healthy growth in bank lending during the first quarter this year, Indonesian banks have been reluctant to lend to the process manufacturing industry and property sector, a BI survey says.
The BI survey, issued Monday, showed banks were little interested in disbursing loans to the process industry, particularly textile and wood processing companies.
The survey said banks perceived the textile industry as unable to produce garments that could compete with Chinese products, and the wood processing industry as prone to illegal logging, making them potential contributors to a rise in non-performing loans (NPLs).
Banks also thought the property sector had been oversupplied, most notably by malls.
BI surveyed about 80 percent of credit officers from all commercial banks whose main offices were located in Jakarta.
In general, however, bank loans in the first quarter grew as expected.
The lending growth in the first quarter of 2008 was up 29.8 percent from the previous year, with 66.7 percent of correspondents saying their banks had disbursed loans as targeted.
"Overall, the lending growth went as expected," BI director of banking research and regulation Halim Alamsyah said Monday.
In 2007, bank lending grew by 25.5 percent from Rp 832.9 trillion (US$90.63 billion) in 2006 to Rp 1,045.7 trillion.
BI expects bank lending to grow by between 22 percent and 24 percent this year on the back of intensified infrastructure projects, Halim said.
Last week, five national banks -- Bank Mandiri, Bank Negara Indonesia (BNI), Bank Rakyat Indonesia (BRI), Bank Central Asia (BCA) and Bank Mega -- agreed to finance the construction of some power plants as part of the government's project to light all areas nationwide by 2010.
The government has said it would prioritize the development of infrastructure projects this year to support the country's economy.
Between January and March, the survey said, banks disbursed more loans for investment and working capital than consumption.
"Investment and working capital loans have grown significantly since 2007, as companies started to increase their production capacity to keep up with increasing demand," said Halim.
The survey said banks would keep prioritizing lending for investment and working capital, mainly in the trade, hotel and restaurant sectors, in the second quarter of 2008.
Sector-wise, Halim said businesses operating in the commodity sector, including in crude palm oil and chocolate, would see significant growth this year.
New Bank Loan Priority
Loan Types Loan Descriptions 2008
Based on Working capital loans 1 Usage Investment loans 3
Consumption loans 2 Consumption Housing 1 Loans Vehicles 2
Multi-use loans 3 Economic Trade, hotel and Sectors restaurants 2
Process industry 1
Services 3 Loan Limits Above Rp 5 billion 1
Between Rp 500 million
and Rp 5 billion 2
Between Rp 50 million
and Rp 500 million 3 Usage Non-exports loans 1 Orientations Exports loans 2
Source: Bank Indonesia