Banks ready for infrastructure plans<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
Bank Indonesia was confident that the country's banking sector
\nwould respond positively to government's plans to develop massive
\ninfrastructure projects across the country over the next five
\nyears.<\/p>\n
\"I am quite confident that banks will respond to future
\ninfrastructure investment in a positive fashion,\" said Miranda
\nGoeltom, the central bank senior deputy governor, during the CNBC
\nStrategic Forum on \"The New Indonesia 2005: Policy and Action\" on
\nMonday.<\/p>\n
There had been significant improvements in the country's
\noverall situation, especially in terms of political certainty and
\nconsistency, she said, adding that the banking system would
\nexperience higher lending growth this year and in the future
\ncompared to previous years due to the more stable environment.<\/p>\n
In regard to foreign commitments to Indonesia's infrastructure
\nprojects, Miranda said foreign investors would usually convert
\ntheir capital into rupiah. But in order to retain the funds in
\nrupiah, there should be a mechanism that allows a longer maturity
\nperiod for currency swaps and hedge transactions.<\/p>\n
\"There should be swap and hedge markets with periods of one,
\ntwo or three years instead of the current three months,\" she
\nsaid.<\/p>\n
She added that the central bank put no limitation on the
\ninflow of foreign currency, as long as the money was used for the
\nreal sector.<\/p>\n
\"But if the currency is traded in foreign exchange markets, we
\nwill certainly limit the volume,\" she said.<\/p>\n
The government offered 91 projects worth about $22.5 billion
\nat the infrastructure summit last week. Indonesia needs $150
\nbillion in investment for roads, power plants and other
\ninfrastructure over the next five years.<\/p>\n
During the summit, there were suggestions that Indonesia
\nshould use long term rupiah financing instead of U.S. dollars.<\/p>\n
Experts commented that naturally, Indonesia would dramatically
\nrebalance the proportion of foreign currencies against the rupiah
\nin the financing scheme, having learned lessons during the
\nfinancial crisis of the late 1990s, where foreign debts ballooned
\nbecause of the dramatic fall in the value of the rupiah.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/banks-ready-for-infrastructure-plans-1447893297",
"image": ""
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}