Ary Hermawan, Jakarta – The chairman of the National Banks Association (Perbanas), Sigit Pramono, has pinned the blame squarely on the shoulder of businesses for the slow lending growth in the real sector.
Speaking during the opening of the Asia Pacific Conference and Exhibition (Apconex) on Wednesday, Sigit argued that the industrial sector was not yet ready to receive loans.
The sector, especially the ailing textile subsector, needed to undergo a major restructuring to ensure sufficient bankability for the extending of fresh loans.
Sigit, who is also the president director of state-owned Bank Negara Indonesia (BNI), had earlier said that fresh lending by local banks to the country's industrial sector had actually been high enough of late, amounting to some Rp 170 trillion (about US$18.8 billion).
However, he pointed out that the greater part of the funds had not been drawn down by the borrowers. "The high level of loans that have not been drawn down indicates that the problems hampering the lending growth to the real sector do not merely concern interest rates, but also other factors, such as those related to the businesses of the borrowers," he said.
Local banks have come under a sustained barrage of criticism for their alleged reluctance to extend loans to the industrial sector. Instead of lending to the real sector, the banks have preferred to park their funds in Bank Indonesia's short-term SBI notes and government bonds, or to focus on the consumer-finance sector.
"The banks have actually been quite aggressive in channeling loans to the real sector. It is just that industry still does not have the capacity to make use of the loans, as shown by the large amount of loans that have not been drawn down," he said.
Bank Indonesia deputy governor Miranda Goeltom said the banking industry continued to improve, with a significant increase in lending over the past few months.
Total lending, she said, rose by 16.7 trillion to Rp 843 trillion as of the end of March from Rp 826.3 trillion as of the end of February thanks to the fall in lending rates to between 13 and 14 percent from between 16 and 18 percent last year.
Of the Rp 16.7 trillion in fresh loans, about Rp 13.3 trillion, or 79 percent, were extended for working capital purposes, about Rp 800 billion, or 4.8 percent, for investment purposes, and about Rp 2.8 trillion, or 16.7 percent, as consumer-finance loans.
In his address to the conference, Vice President Jusuf Kalla again criticized the banks for not doing enough to support the country's small and medium enterprises (SMEs).
He accused the banks of favoring large corporations and neglecting small businesses.
"The big companies have no problem at all in getting loans, and, sometimes, quite cheap loans. On the other hand, SMEs find it difficult to get loans, and they are also quite expensive. Where is the justice in this country?" he said.
Big companies are generally charged 12 percent interest on their borrowings, while SMEs have to pay 24 percent, he said. "It's not fair. They are making profits from the small people by charging them a higher rate," he complained.