'Banks face problems increasing lending in Flores'

'Banks face problems increasing lending in Flores'

Sari P. Setiogi, The Jakarta Post, Jakarta

The level of bank lending in Flores, East Nusa Tenggara,
remains relatively low because of limited business opportunities
in the area, a senior Bank Indonesia official said.

Bank Indonesia senior deputy governor Anwar Nasution said over
the weekend that banks also faced problems in identifying
acceptable collateral as a lot of the land in the area was
uncertified.

"There are relatively few business opportunities on the
island, while frequently the land offered as collateral is
uncertified," he told a seminar on how to accelerate economic
growth in Flores.

The seminar was also attended by the State Minister for the
Acceleration of Development in Eastern Indonesia, Manuel
Kaisiepo.

Anwar said there were several sectors that could be developed
in the region, particularly the export of pearls, fish
(especially snapper) and cashew nuts.

He said that over the past two years, the central bank had
been encouraging banks to lend more money in Flores.

As of March, bank lending exposure in Flores reached Rp 441.9
billion (US$49.65 million), still far below the third party funds
collected by banks on the island, which amounted to Rp 1.19
trillion.

Loans were still dominated by consumer loans, which were worth
Rp 237.2 billion.

In general, economic growth in Flores was higher than in
other regencies in East Nusa Tenggara province, although the area
still lagged behind Kupang, the provincial capital city.

East Nusa Tenggara and other eastern parts of Indonesia have
been lagging behind in economic development compared to Java and
parts of Sumatra.

Kaisiepo said in his keynote speech that this was partly due
to the poor economic policies of the past, pointing out that the
same economic blueprint had been applied to both Java and the
eastern part of Indonesia, which had different characteristics.

But he said that the new autonomy policy should provide room
for local governments to push economic development in their
respective areas.

However, he called on regional governments not to issue
regulations that could discourage investors or that contradicted
central government legislation.