Sri Wahyuni, Yogyakarta – The Association of Indonesian Economists' (ISEI) Yogyakarta branch has called on Bank Indonesia on Thursday to consider writing off the bank loans of debtors in Sleman regency who are badly affected by the Mount Merapi eruptions.
The measure was especially proposed for customers with outstanding credit of up to Rp 100 million (US$10,600) each. The fund could come from either or both the central government, the Yogyakarta provincial administration and state-owned enterprises.
"We are to follow up the proposal by sending letters to the BI governor, Yogyakarta governor, and the finance and state-owned enterprises ministers," the association chairman Lincolin Arsyad said in Yogyakarta.
Quoting data from BI's Yogyakarta office, Lincolin said there was an estimated 3,655 debtors so far in areas badly affected by the eruptions of the world's most active volcano, with a combined outstanding credit of Rp 106.4 billion. "These are credits that have the potential to turn into bad debts," he said.
The association, he added, had also estimated that the eruptions had caused a total loss worth up to Rp 5 trillion including in subsectors of fishery, tourism, infrastructure and education. "The figure will surely increase if we also include areas bordering the three worst hit areas of Cangkringan, Pakem and Turi districts," Lincolin said.
The eruptions, which first started on Oct. 26, have claimed more than 270 lives as of Thursday according to data at the National Disaster Management Agency (BNPB) and have displaced some 400,000 others in the four affected regencies of Sleman in Yogyakarta and Magelang, Boyolali and Klaten in Central Java.
Apart from proposing to the government to potentially exempt Merapi victims from bank loans, the association is also proposing to the finance minister to consider exempting them from various taxes until they fully recover from the disaster.
Team coordinator Mudrajad Kuncoro expressed hope that the proposal would be valuable input for the government in conducting the reconstruction and rehabilitation programs for survivors of Merapi eruptions. He also expressed optimism toward the proposal, based on the experience of dealing with the rehabilitation and reconstruction programs for survivors of the 2006 earthquakes in the province.
He said the government back then agreed to write off survivors' bank loans with outstanding credit of up to Rp 50 million each. The total fund spent on the program at that time was Rp 7 billion.
The 2006 earthquakes that killed nearly 6,000 lives in Yogyakarta and Central Java caused some Rp 500 billion in losses in the banking sector, which affected about 21,000 debtors across Yogyakarta province.