Credit policy won't slow RI economy<\/p>\n
JAKARTA (JP): The government's plan to slow down credit
\nexpansion to 19 percent in the 1995-1996 fiscal year from 22
\npercent in 1994-1995 will not stagnate the country's economy,
\neconomists predict.<\/p>\n
Djisman Simandjuntak, the executive director of the Prasetya
\nMulya post-graduate management institute, said yesterday that the
\nlower credit expansion would not affect the country's economic
\ngrowth projection of between 6.5 percent and 7 percent this year.<\/p>\n
The impact of the slower credit growth will be small because
\nbusinessmen and investors still have a number of other
\nalternatives to finance their investments, he said of possible
\nconsequences of the government's tight monetary move.<\/p>\n
He said that entering the stock market could be a good choice
\nfor the business world in raising funds for new investments or
\nexpansion activities.<\/p>\n
Djisman said that unlike bank credit, raising investment funds
\nthrough the capital market will create less inflationary
\npressure.<\/p>\n
\"The central bank's plan to slow the credit growth in the
\nbanking system is timely. So that we don't have to worry about
\nthe economy overheating,\" he said.<\/p>\n
There is no official indicator to identify when the country's
\neconomy is overheating but experts believe that the inflation
\nrate can be still checked at around 10 percent even if the
\neconomy were to grow by between 7 percent and 7.5 percent.<\/p>\n
The inflation rate reached 9.24 percent last year, as compared
\nto 9.77 percent in 1993. The 1994 economy is estimated to grow by
\n6.7 percent.<\/p>\n
Bangun Sarwito Kusmuljono, the president of Nusa Bank, shared
\nthe view that the slower growth in credit expansion would not
\ncause stagnation of the economy.<\/p>\n
\"In fact an increase of 100 percent will cause no problem at
\nall as long as all credit is used for productive activities,\" he
\nsaid.<\/p>\n
The high supply of bank loans to the business sector has often
\nhad an inflationary impact over the past several years as many
\nborrowers used some of the investment loans for non-productive
\nactivities, he said.<\/p>\n
Overseas<\/p>\n
Besides trimming the credit supply, the government also plans
\nto strengthen control over overseas borrowing by the private
\nsector in a bid to curb the widening current account deficit.<\/p>\n
Economists estimate that the expected sharp increase in the
\ninflow of direct investments will be able to compensate for the
\ndrop in the credit supply from domestic financial sources and the
\npossible reduction of foreign commercial loans coming into the
\ncountry.<\/p>\n
Approved foreign investments almost tripled to US$23.7 billion
\nlast year from $8.1 billion in 1993.<\/p>\n
Businessmen are reacting cautiously over the government's
\ntight monetary measures.<\/p>\n
Fadel Muhammad, the president of the Bukaka Group, said that
\nsmall-sized and medium-scale companies should be given the
\nprivilege of getting bank loans in the next fiscal year so that
\ntheir operations will not be hurt severely by the credit crunch.<\/p>\n
\"Giving a privilege to small-scale and medium-scale borrowers
\nis necessary as, unlike big corporations, they are still too
\ndependent on bank loans,\" he said.<\/p>\n
Concerning the stricter control of offshore loans, Fadel said
\nthat the measure was good and that approvals to obtain offshore
\nloans should be given under a \"first come first served\" basis.<\/p>\n
\"We don't want approvals to be given merely to a certain group
\nof companies, but to those which are already on the waiting
\nlist,\" he said.(hen)<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/credit-policy-wont-slow-ri-economy-1447893297",
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