Mandiri may not meet loan target for corporate sector<\/p>\n
Rendi A. Witular, The Jakarta Post, Jakarta<\/p>\n
State-owned Bank Mandiri, the country's largest bank, said on
\nTuesday that it might miss this year's lending target for the
\ncorporate sector, because the overall business climate remained
\nunfavorable.<\/p>\n
"It's not an easy task to channel loans to the real sector
\nthese days... It's still difficult. Mandiri is unlikely to meet
\nits lending target for this year," said Mandiri president E.C.W.
\nNeloe.<\/p>\n
He said that as in the first semester of this year, the bank
\nonly managed to channel less than Rp 2 trillion (US$238 million)
\nin fresh loans to the corporate sector, compared to the initial
\nplan of Rp 8 trillion for the full year.<\/p>\n
Neloe said the lower lending was due to two reasons.<\/p>\n
First, some companies were still reluctant to expand their
\nbusinesses because of the poor investment climate and the lack of
\nincentives from the government to support their operations.<\/p>\n
"Local investors are facing the same problems as foreigners,"
\nsaid Neloe.<\/p>\n
Second, banks still considered lending to the corporate sector
\na risky business because of the slow debt restructuring progress.<\/p>\n
Mandiri lending director Sholeh Tasripan said the bank had
\nlisted several sectors that were considered risky, including the
\ntextile, forestry and footwear sectors.<\/p>\n
Sholeh said that these sectors -- long known as the country's
\nforeign exchange earners -- were risky because their products'
\ncompetitiveness in the international market had declined.<\/p>\n
As of June this year, Mandiri's outstanding loans reached Rp
\n66.8 trillion, most of which was channeled to the agricultural,
\ntrade and chemical sectors.<\/p>\n
Bank Indonesia Governor Burhanuddin Abdullah said last week
\nthat bank lending must grow by between 20 percent and 22 percent
\nnext year to allow the country to reach economic growth of
\nbetween 4 percent and 4.5 percent.<\/p>\n
During the past couple of years, the economy has been growing
\nat a meager rate of around 3.5 percent. The government has been
\nunder pressure to push growth to proved more jobs for the 40
\nmillion unemployed people.<\/p>\n
The central bank has aggressively lowered its benchmark
\ninterest rate to encourage banks to cut their lending rates and
\nmake their loans more affordable for the corporate sector -- the
\npillar of the real sector economy.<\/p>\n
However, banks are still being criticized for their impotence
\nin reviving loans to the real sector, and are apparently turning
\na deaf ear to the central bank's call to lower their rates. The
\nlending rate remains high at an average 17 percent to 18 percent,
\nwith the real sector still finding it difficult to receive
\nfinancing from banks.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/mandiri-may-not-meet-loan-target-for-corporate-sector-1447893297",
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"sponsor": "Okusi Associates",
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