Businesses call for lower bank lending rate<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
Businesspeople urged the country's banking sector to lower
\ninterest rates on bank loans because the current rate level was
\ntoo costly, particularly for small and medium-sized enterprises.<\/p>\n
"Businesses can not afford the current lending rate of around
\n21 percent," Soy Pardede, an executive at the Indonesian
\nChambers of Commerce and Industry (Kadin), said during a weekend
\ninvestment and economic forum in Bukittinggi, South Sumatra.<\/p>\n
The forum was also attended by Coordinating Minister for the
\nEconomy Dorodjatun Kuntjoro-Jakti, Coordinating Minister for the
\nPeople's Welfare Yusuf Kalla and Bank Indonesia Governor Sjahril
\nSabirin.<\/p>\n
Soy said the government could intervene in the banking
\nindustry to push the rate lower because the government had
\neffectively controlled a number of major banks following the
\nrecapitalization program in the late 1990s.<\/p>\n
He said that the intervention was needed as many banks were
\nstill reluctant to channel their money to the corporate sector,
\nplagued by huge non-performing loans.<\/p>\n
Bank Indonesia has been guiding its benchmark interest rate
\nlower during the past year, from 17 percent in the beginning of
\nlast year to the current level of around 12.49 percent, in the
\nhopes of enticing commercial banks to lower their lending rates
\nso that businesses can expand and fuel economic growth.<\/p>\n
However, most banks were still maintaining a high lending rate
\nas the risk of investing in the corporate sector was still
\nconsidered high amid slow progress in the debt restructuring
\nprogram.<\/p>\n
Banks have also been "extra careful" in approving new loans to
\navoid past lending mistakes, which contributed to the 1997-1998
\nfinancial and banking crisis.<\/p>\n
But Soy said that the government must not only focus on
\nreviving the banking sector, because turning around the business
\nsector, also hard hit by the economic crisis, was crucial to
\ncreate jobs and avoid more unemployment.<\/p>\n
He said that without the lower rate, many businesses would
\neventually go bankrupt.<\/p>\n
Djadin C. Djamaluddin of the Indonesian Textile Association
\n(API) said that many banks had also charged small and medium-
\nsized enterprises (SMEs) with high lending rates.<\/p>\n
He said that the high interest rate environment had made local
\nSMEs and their products less competitive compared to their
\nregional peers which enjoy favorable interest rates on bank
\nloans.<\/p>\n
This year, the banking sector is expected to lend around Rp 65
\ntrillion in new loans, compared to Rp 79.4 trillion in 2002,
\naccording to a data from the central bank. A large portion of
\nthe lending will be directed at SMEs.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/businesses-call-for-lower-bank-lending-rate-1447893297",
"image": ""
},
"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
}