Loan utilization by real sector low: BI
Berni K. Moestafa, The Jakarta Post, Jakarta
Bank Indonesia said companies had absorbed only 40 percent of the loans provided by the banking sector, underscoring the private sector's low investment capacity to stimulate economic growth.
Bank Indonesia Governor Sjahril Sabirin said on Friday that high interest rates were unlikely the root of sluggish investment growth in the real sector.
"If we look at our credit data, the credit ceiling is quite high, but realization is slack, just about 40 percent on the average," he said.
Earlier, several businessmen complained that Bank Indonesia's high interest rates dried up their sources of funding.
Banks, they said, were more eager to invest in Bank Indonesia's promissory notes instead of channeling new loans.
They said that to drive economic growth and create new jobs, the central bank must lower its rates to make loans affordable.
But Sjahril argued that the low take-up of banks' loans suggested that industries were unable to find a profitable use for the funds.
"From the banking side of it, there is an earnest move to provide lending," he said.
He added that bank's interest rates, if compared to the high inflation rates, were in fact low.
Bank Indonesia's promissory notes (SBIs) have been steadily rising from about 11 percent since early this year. Over the last few months they have stabilized at more than 17 percent.
That provides SBI investors or banks with an interest margin of between 5 percent and 6 percent, with year-on-year inflation rates at about 11 percent and higher since last March.
Turning to the rupiah, Sjahril indicated that the central bank may lower its objective to reduce the currency's volatility instead of lifting it to a certain level.
"We'll try at least to prevent too much volatility, that's all," he said, adding that the bank would continue to intervene in the money markets if necessary.
Earlier he said the rupiah's fundamental value should be about Rp 7,500 to Rp 8,000 to the U.S. dollar.
On Friday, the local currency closed at Rp 10,253, just slightly lower from Thursday's close at Rp 10,250.