'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.