Megawati opens 15th Perbanas banking congress<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
President Megawati Soekarnoputri has advised bankers not to
\nrepeat the mistakes of the past and to uphold the principles of
\nprofessionalism in order to regain public confidence in the
\nbanking sector.<\/p>\n
In so doing, "We hope our bitter experience in the past will
\nnot occur again," Megawati said, referring to the devastating
\nbanking crisis in the late 1990s that severely damaged the
\npublic's trust in the nation's banks.<\/p>\n
Megawati made the statement on Thursday to open the 15th
\ncongress of the Federation of Private Domestic Banks (Perbanas)
\nat the State Palace.<\/p>\n
Minister of Finance Boediono, Bank Indonesia governor
\nBurhanuddin Abdullah and Perbanas chairwoman Gunarni Soeworohe
\nwere also present at the event, which was attended by 250
\nbankers.<\/p>\n
Perbanas, now in its 51st year of existence, currently has
\nonly 79 member banks, a sharp drop from its 160-strong membership
\nbefore the banking crisis.<\/p>\n
During the crisis, a great number banks went under as their
\nloans turned bad, with many blaming the crisis on the sector's
\ninability to implement a prudent credit risk management.<\/p>\n
The President's remarks came at the height of criticisms that
\nbanks had yet to resume proper lending activities to the
\ncorporate sector.<\/p>\n
While Bank Indonesia has aggressively cut down its benchmark
\nrate to around 8.76 percent -- a decline of more than 4 percent
\nsince early this year -- banks still charge an interest rate of
\naround 17-18 percent for loans, little changed from the 19
\npercent at the start of the year.<\/p>\n
Analysts have said the high rates helped discourage businesses
\nfrom asking for new loans from the banking sector, and some have
\neven said that the insufficient amount of loans from the banks
\nhad contributed to the country's lackluster economic growth rate.<\/p>\n
For the past three years or so, the economy has been growing
\nat a modest 3 to 4 percent.<\/p>\n
For an economic growth of the over 5 percent needed to absorb
\nthe huge unemployment rate, loans from the banking sector must
\nexpand by more than 25 percent.<\/p>\n
Acknowledging the challenge, Gunarni said that reviving banks'
\nintermediary role would be the main agenda of the congress.<\/p>\n
"One of the main aims of Perbanas is to help speed up economic
\nactivities through financing. This is why there must be a
\nconcerted effort from the sector to maximize the banks'
\nintermediary role to help spur economic development," she said.<\/p>\n
Also high on the agenda of the two-day congress will be the
\nelection of a new Perbanas chairman for the 2003-2006 period.<\/p>\n
Although the names of potential candidates have been already
\ncirculating, no official nominations have yet been announced.<\/p>",
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