Govt to maintain
\nrestrictions on
\ncommercial loans<\/p>\n
JAKARTA (JP): Minister of Finance Mar'ie Muhammad said here
\nyesterday that the government will continue to restrict the
\ninflow of offshore commercial loans to avoid worsening the
\ncountry's debt-service ratio.<\/p>\n
The private sector should maximize the domestic financial
\nsources to finance their investment projects, the minister said,
\nadding that the private sector should avoid using offshore loans
\ndespite their growing role in the country's development efforts.<\/p>\n
\"The strict control of offshore borrowing is essential, not
\nonly to maintain the level of the balance of payments at a
\ncomfortable level, but also to reduce the debt burden,\" the
\nminister said at a seminar on strategic financing sources.<\/p>\n
Bank Indonesia Governor J. Soedradjad Djiwandono, president of
\nthe state-owned Bank Negara Indonesia (BNI), Winarto Soemarto and
\nthe chairman of Merrill Lynch Limited for the Asia and Pacific
\nRegion, Peter Clarke, were among the speakers at the seminar held
\nby the Editor weekly magazine.<\/p>\n
Mar'ie promised to further address the country's non-bank
\nfinancial sources to enable the private sector to benefit from
\nthe government's massive infrastructure projects in the 1994-1999
\nsixth Five-Year Development Plan (Repelita VI) period.<\/p>\n
Capital market<\/p>\n
The capital market should be further developed to give the
\nprivate sector better alternatives for raising investment funds,
\nhe said.<\/p>\n
Indonesia should invest at least Rp 660 trillion (US$314
\nbillion) to sustain economic growth in the current five-year
\ndevelopment plan. The private sector is expected to contribute
\naround 73 percent of that figure.<\/p>\n
The central bank governor shared the finance minister's view
\non the need of the private sector to enter the capital market to
\nobtain investment funds.<\/p>\n
\"I think the capital market is the best financing alternative
\nat present,\" Soedradjad said, adding that domestic banks are also
\na good financing alternative, but the available funds in the
\nbanks are not sufficient to meet the huge investment demand.<\/p>\n
He said the private sector should use local financial sources,
\nas raising commercial loans from overseas will still be
\nrestricted in order to reduce the country's debt burden.<\/p>\n
Soedradjad said the country's debt-service ratio is expected
\nto decline to 20 percent by the end of the Repelita VI period in
\n1999 from around 32 percent at present.<\/p>\n
He said the government will also continue to improve the
\ninvestment climate to further attract foreign investments.
\n\"Foreign direct investment is one of important financial
\nalternatives for development in the next five years,\" he said.<\/p>\n
Dollar rush<\/p>\n
In another development, the finance minister dismissed reports
\nof a rush to buy dollars based on rumors of the government's plan
\nto devalue the rupiah.<\/p>\n
\"There is no rush at all,\" the minister told newsmen following
\nhis meeting with President Soeharto after attending the seminar.<\/p>\n
The minister said that dollar transactions have remained
\nnormal this week and \"there is nothing wrong with the rupiah.\"<\/p>\n
Newspapers reported that many people have converted their
\ndeposits to dollars to avoid losses from the rupiah depreciation
\ncaused by the estimated increase in the inflation rates. Other
\nnewspapers also reported that people have rushed to buy dollars
\nin the country's major cities for fear of the rupiah devaluation.<\/p>\n
Mar'ie acknowledged that there was a surge in dollar
\ntransactions earlier this week. \"But this is a seasonal increase
\nthat takes place annually when haj pilgrims exchange their rupiah
\ninto dollars,\" he said.<\/p>\n
More than 150,000 Indonesians will join the haj pilgrimage
\nthis year, some of whom departed for Mecca last week.<\/p>\n
Meanwhile, Soedradjad said the increase in the U.S. interest
\nrates will not affect the country's monetary system and that the
\ncentral bank will not adjust the discount rate of its Bank
\nIndonesia Certificate (SBIs) due to the increase.<\/p>\n
He acknowledged that the rise in the U.S. rate will further
\nattract some to convert their rupiah deposits to the dollar.<\/p>\n
The interest rate on deposits in the U.S. greenback offered by
\nlocal banks ranges between four and five percent per annum at
\npresent. The rise in the U.S. rate is expected to further
\nincrease the rate.<\/p>\n
Interest rates of rupiah deposits, which range between eight
\nand nine percent per annum, are considered less attractive due to
\nthe estimated increase in the inflation rate.<\/p>\n
Soedradjad, however, said that investing in the rupiah remains
\nmore profitable despite a significant increase in the inflation
\nrate during the first quarter of this year.<\/p>\n
\"The inflation is still manageable and I think it could be
\nchecked below nine percent this year,\" he said when he was asked
\nabout the estimated nine percent increase in the inflation rate.<\/p>\n
Inflation was checked at 9.7 percent last year.(fhp\/hen)<\/p>", "url": "https:\/\/jawawa.id\/newsitem\/govt-to-maintain-1447899208", "image": "" }, "sponsor": "Okusi Associates", "sponsor_url": "https:\/\/okusiassociates.com" }