'Interest rate increase hits me hard'

'Interest rate increase hits me hard'

In order to arrest the rapid fall of the rupiah against foreign
currencies, Bank Indonesia has decided to increase the interest
rate of the Bank Indonesia Certificate, a move that forces
commercial banks to raise their interest rates. While the
decision may help shore up the value of the rupiah, it
inadvertently burdens people who have to pay installments of
their bank loans. The Jakarta Post interviews residents to get
their views on the issue.

Anggraini, 38, is a resident of Puri Serpong housing complex
in Cisauk, Tangerang. He works as a teacher for a private English
school in Bumi Serpong Damai (BSD) housing complex, also in
Serpong, Tangerang:

Of course the rise in interest rates will affect my ability to
repay bank loans. Currently, I pay an interest rate of 17 percent
per year, and I am sure the rate will go up.

I do not know by how many percentage points the interest rate
will go up, but I had been hoping this would not happen.

Now, I pay a monthly installment of Rp 1 million to the bank,
Rp 250,000 is to pay back the loan and the remainder is for the
interest.

I'm planning to look for banks that can offer me a lower
interest rate in order to ease my financial burden. I checked
with several state banks and I learned that they offer an
interest rate of 12 percent only.

Yudhi, 28, works for a publishing company in Blok M, South
Jakarta. He lives in Pondok Aren, Tangerang:

That (the interest rate increase) is a new headache for me. It
really worries me. I don't know what to do to weather the hike. I
still have nine years to go to pay off my loan. This year is my
first year.

For sure, the interest rate increase will screw up everything.

Last month, I dug deeper into my pocket owing to the interest
rate increase. The developer said the increase was owing to the
depreciation of the rupiah against the U.S. dollar.

Unfortunately, we don't know how long we will experience this
crisis. I heard Hurricane Katrina had put the U.S. as well as
world economies under pressure.

-- The Jakarta Post