IMF urges banks to lend to retailers

IMF urges banks to lend to retailers

Fitri Wulandari, The Jakarta Post, Jakarta

The International Monetary Fund (IMF) has promised to advise
banks to lend more to retailers, as the sector is considered to
have a significant impact on the country's economy.

"Banks should be able to lend more to retailers. The IMF will
advise them to help retailers," Chairman of the Association of
Indonesian Retailers (Aprindo) Hari Darmawan told The Jakarta
Post on Monday.

Hari made the statement following a closed door meeting
between visiting IMF officials and Aprindo.

He said that the fund knew that small and medium-scale
retailers played an important part in helping to get the
country's economic wheel turning.

Hari said that in the meeting, the IMF asked the association
to provide data on the country's retail business.

The fund also asked about the performance of the banking
sector in backing up the retail sector.

"We just said that banks have never given us sufficient
financial support," Hari said.

An IMF team has been in Jakarta for more than a week now to
review the country's economic reform programs.

Pushing banks to resume their lending activities after the
sector was badly hit by the 1997 financial crisis had been one of
the government's major economic programs.

According to data from local consultant Capricorn
International Consultant, 85 percent of the total retail market
turnover in 2001 was from traditional markets, while the
remaining share was divided between supermarkets and the
wholesale sector.

The data shows that supermarkets and minimarkets booked a
total sale of Rp 9.3 trillion (US$898 million), wholesale was Rp
5.7 trillion, while traditional markets booked a total sale of Rp
190.8 trillion.

The government has predicted that consumer spending would be
the main driving force behind the country's economic growth this
year.

While saying the retail business has good future prospects,
Hari predicted that for the first semester of this year, the
retail sector would slow down.

The hike in electricity tariffs, fuel prices, minimum wages
and the recent floods would likely increase production costs, he
said.

"I don't think we will make any profit for the first six
months because sales will likely go down, while operating costs
will rise," Hari said.