RI's financial structure grows stronger: Soedradjat

RI's financial structure grows stronger: Soedradjat

JAKARTA (JP): The growing capital market will soon compete
with the banking industry to finance economic activities, Bank
Indonesia Governor J. Soedradjad Djiwandono says.

The total funds raised from the issuance of shares and bonds
through the capital market, for example, steadily increased from
Rp 10 trillion, or 10.4 percent of total banking credits provided
by banks as of the end of 1990, to Rp 29.4 trillion, or 18.1
percent of banking credits as of the end of June 1994, he said
yesterday.

Companies apparently prefer to generate funds to finance their
investment activities or to strengthen their finances rather than
banking the credits, he added.

More investors, both foreign and domestic, hope to utilize the
capital market as a place for their portfolio investments, he
said.

However, the banking industry has expanded rapidly since the
introduction of financial deregulatory measures in October 1988.

The number of banks in the country, for example, increased
from 124 as of October 1988 to 237 as of May 1994 and the number
of banking offices from about 1,900 to almost 6,000, excluding
the 9,000 offices of secondary banks.

The amount of credits extended by banks also increased
steadily from Rp 49 trillion as of October 1988 to Rp 161
trillion as of May 1994, he added.

"These developments indicate that the country's financial
structure is growing stronger and is conducive to supporting its
development programs," Soedradjad said.

"I am optimistic that the financial developments will enable
the country to achieve its development goals during the current
Sixth Five Year Development Plan (Repelita VI) period," he said.

The plan will end in March 1999.

Repelita VI aims for the country's gross domestic product
(GPD) to grow by 6.2 percent annually in the coming five years.

Achieving the development goals will require total investments
of Rp 660 trillion, of which 73 percent should come from the
private sector and the rest from the government. (icn)