Business leaders brief Habibie on economic crisis<\/p>\n
JAKARTA (JP): Business leaders briefed President B.J. Habibie
\nyesterday on the critical condition of the economy and called for
\nmore concerted efforts to revive the banking industry, the source
\nof lifeblood for economic activity.<\/p>\n
The government needs to act quickly and firmly to lead the
\nbanking industry out of its virtual paralysis, Aburizal Bakrie,
\nchairman of the Indonesian Chamber of Commerce and Industry
\n(Kadin) told reporters after a meeting with Habibie at Bina Graha
\npresidential office.<\/p>\n
\"The Indonesian Bank Restructuring Agency (IBRA) should be
\nfurther empowered to strengthen the problem banks currently under
\nits supervision and management,\" Aburizal added.<\/p>\n
Aburizal led a large delegation of Kadin executives to a first
\nmeeting with the President to appraise him of the dire economic
\nsituation and to suggest ways of resolving the crisis.<\/p>\n
The Central Bureau of Statistics reported Monday that the
\ncountry's gross domestic product contracted 8.51 percent in the
\nfirst quarter and projected a total negative growth of more than
\n10 percent for the year.<\/p>\n
Kadin suggested that the government select a number of private
\nand state banks, based on a set of criteria, to be quickly
\ndeveloped into anchor banks which would be fully trusted
\ndomestically and internationally.<\/p>\n
\"These anchor banks could eventually be merged with the (54)
\nproblem banks currently being restructured by IBRA,\" Aburizal
\nadded.<\/p>\n
Most Indonesian banks now face extreme financial difficulties
\nas a result of the 80 percent depreciation of the rupiah against
\nthe American dollar.<\/p>\n
High interest rates, a severe lack of liquidity and low
\ncapital levels and huge bad loans are further crippling most
\nbanks and consequently the corporate sector.<\/p>\n
Analysts say most banks currently cannot extend loans and are
\ndesperate to collect on outstanding loans so they can satisfy
\ndepositor and creditor payment demands.<\/p>\n
The central bank said that as of late last month it had pumped
\nmore than Rp 124 trillion (US$12.4 billion) in liquidity credits
\nto banks facing severe liquidity problems.<\/p>\n
Interest rate<\/p>\n
Kadin suggested yesterday that the central bank lower its
\nbenchmark interest rate from its current 58 percent level because
\nbusinesses could not handle such punitively high capital costs.<\/p>\n
The chamber said the government and businesspeople,
\nirrespective of company size or ethnic group, should join hands
\nin restoring production and distribution facilities.<\/p>\n
A large number of business establishments, including shops,
\nshopping malls and bank offices in Jakarta, its surrounding areas
\nand several provincial cities, were severely damaged from looting
\nand arson last month.<\/p>\n
Most of the damages were inflicted upon the businesses of
\nethnic Chinese businesspeople.<\/p>\n
Aburizal added that Kadin supported the President's plan to
\nappoint special envoys with an ambassadorial rank from the
\nprivate sector with the specific task of restoring international
\nconfidence in Indonesia's economic prospects and business sector.
\n(vin)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/business-leaders-brief-habibie-on-economic-crisis-1447893297",
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"sponsor": "Okusi Associates",
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