State banks urged to ignite real sector

Rendi A. Witular, The Jakarta Post, Jakarta

The government, relying on the role of state banks to help speed up economic growth, has asked four large state banks to focus their lending on small and medium enterprises, infrastructure projects, farming and fisheries.

Coordinating Minister for the Economy Aburizal Bakrie said after a Cabinet meeting on Tuesday that the four banks -- Bank Mandiri, Bank Negara Indonesia (BNI), Bank Rakyat Indonesia (BRI) and Bank Tabungan Negara (BTN) -- could contribute up to 40 percent of this year's loans.

"President Susilo Bambang Yudhoyono hoped that this year alone, the domestic banking sector could extend at least Rp 106 trillion in credit, 40 percent of which should be from those four state banks," said Aburizal.

He also said that domestic banks have the ability to fund some 20 percent of the total funding needed in each sector. "We hope that for the next five years, the banking sector will provide at least Rp 500 trillion in new loans," Aburizal added.

For instance, from the massive US$140 billion needed for infrastructure projects planned for the next five years, Aburizal said that the country's banking sector could contribute some Rp 200 trillion ($21.6 billion).

Aburizal's remarks came at a time when most banks are currently focusing on consumer loans, and, to some extent, staying away from the corporations due to perceived high risks.

Elsewhere, on microcredit lending, Aburizal said the four state-owned banks should lower their interest to an average of 12 percent from the nearly 15 percent interest at present.

Meanwhile, Bank Indonesia's governor Burhanuddin Abdullah said that the central bank would try to guide inflation down to 3 percent over the next three years in order for banks to be able to keep their microcredit loan interest at 9 percent.

Aburizal added that the government would start identifying productive small and medium enterprises eligible for low-interest loans next week.