Hamzah urges banks to resume lending role
The Jakarta Post, Jakarta
Vice President Hamzah Haz urged bankers to immediately start providing credit for the business sector to "repay" the public for the money spent to finance troubled banks following the financial crisis in the late 1990s.
"I expect the bankers to pay for the cost of the crisis by giving credit, so the results can be enjoyed by the public," he said on Thursday.
Speaking at the opening of the sixth national convention of the Indonesian Chamber of Commerce and Industry (Kadin), Hamzah said that the initial reason for the disbursement of the Bank Indonesia Liquidity Support (BLBI) to the banking industry was to revive the intermediary role of the banks.
But he was quick to add that the government would not intervene in the banking industry by forcing them to boost loans to the business sector.
The government injected billions of dollars worth of public funds into the banking sector to bailout the industry during the crisis. The taxpayers via the state budget had to shoulder the cost.
Despite the improvement in the country's macroeconomic conditions as reflected in the stable rupiah, low inflation and interest rates, the banking sector has largely declined to boost new lending to the corporate sector. Bankers argue that lending to the corporate sector is still risky due to slow progress in the restructuring of corporate debt.
Hamzah said that the rising stability in macroeconomic indicators should be seen as a momentum by bankers to help revive the corporate sector.
He said that if the corporate sector could obtain funds from banks to expand their business operations, it would help the overall economy and bring in higher tax revenue for the government.
Hamzah, the leader of the United Development Party, also urged Kadin to pioneer efforts toward developing small and medium enterprises, which make up about 95 percent of the country's businesses.
"Through its associations, Kadin should be able to boost the business sector and provide inputs for the banking sector," he said.