Developers told to use loans prudently<\/p>\n
JAKARTA (JP): Bank Indonesia Governor J. Soedradjad Djiwandono
\nhas warned property developers to use their bank loans prudently
\nto avoid exposing the country's banks to liquidity risks.<\/p>\n
Speaking at the association of Indonesian property developers'
\nnational congress on Monday, Soedradjad warned property
\ndevelopers not to use bank loans for speculation.<\/p>\n
\"The property industry is vulnerable to market and liquidity
\nrisks,\" he said, adding that if property businesses failed it
\ncould pose serious problems to the overall banking industry.<\/p>\n
Soedradjad said that bank lending to the property sector was
\ngrowing too fast, reaching 26 percent in the first nine months of
\nthis year, compared to 23.5 percent in 1995.<\/p>\n
The growth in bank credits to real estate developers reached
\n33 percent in the January-September period, while loans for
\nconstruction and home ownership grew 30 percent and 14 percent,
\nrespectively. Overall lending growth for the period was 16
\npercent.<\/p>\n
Credit growth in the manufacturing sector was 5.7 percent in
\nthe period, while growth for trade, services and hotel sectors
\nwas 20.6 percent.<\/p>\n
Soedradjad said many Japanese banks suffered serious financial
\nproblems in the early 1990's because of overzealous lending to
\nthe property sector.<\/p>\n
Excessive lending to the property sector does not only expose
\nthe country's banks to financial risks but also causes strong
\ninflationary pressures, the central bank governor said.<\/p>\n
The chairman of the property developers' association, Edwin
\nKawilarang, appealed to the country's property developers to
\nbuild more houses for poor people.<\/p>\n
The association's members can cooperate with industries or
\ngovernment institutions in building low-cost housing, he said.<\/p>\n
Minister of Cooperatives and Small Enterprises Subiakto
\nTjakrawerdaya said his office was ready to help, saying that it
\nwas his ministry's program to provide low-cost housing.<\/p>\n
State Minister for Housing Affairs Akbar Tanjung said at the
\ncongress that the government had set a target to build 500,000
\nunits of low-cost housings in the sixth five-year development
\nplan, which will end in 1999.<\/p>\n
He said he hoped the association's members would be able to
\nbuild 300,000 units from the overall target.<\/p>\n
According to Akbar, at least 377,000 units had been built
\nacross the country. (02)<\/p>",
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"sponsor": "Okusi Associates",
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