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4/1/2021 12:00 AM
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Synergy Driving Bank Financing, Businesses Optimistic

Government Press Release

JOINT PRESS RELEASE

SP – No. 23/83/DKOM, SP – 28/KLI/2021

SP – 16/DHMS/OJK/4/2021

Policy synergy between the Ministry of Finance, Bank Indonesia (BI), Financial Services Authority (OJK) and Deposit Insurance Corporation (LPS), banking industry and business community is oriented towards stimulating credit and financing to priority sectors.  This is consistent with the Integrated Policy Package issued on 1st February 2021 by the Financial System Stability Committee to increase corporate financing and accelerate economic recovery, including: (i) fiscal incentives and government expenditure support as well as financing; (ii) monetary stimuli, accommodative macroprudential policy and payment system digitalisation; (iii) prudential financial sector policy; and (iv) deposit guarantee policy.  Businesses are optimistic that the economic recovery will endure.  As was prevailing sentiment at the Stakeholder Meeting to Accelerate the National Economic Recovery, held today (01/04) in Surabaya, with BI Senior Deputy Governor, Destry Damayanti, Deputy Minister of Finance, Suahasil Nazara, OJK Commissioner, Heru Kristiyana, and Vice Chairperson of Commission XI of the People’s Representative Council (DPR), Fathan Subchi, in attendance.

BI Senior Deputy Governor, Destry Damayanti, reiterated the need to target lending and financing towards national priority sectors.  Mapping has revealed 38 priority subsectors with a significant contribution to GDP and exports, including six resilient subsectors, 15 growth drivers and 17 recovery drivers.  In East Java, 21 priority subsectors increased production capacity in the fourth quarter of 2020, with the trend expected to persist in 2021.  Nevertheless, additional financing through the banking industry remains constrained.  Therefore, Bank Indonesia is maintaining a policy mix to catalyse economic recovery, including business financing.  Bank Indonesia has cut its policy rate six times since 2020 by 150 basis points to 3.50% and injected massive liquidity to the banking industry.  In addition, Bank Indonesia is promoting prime lending rate transparency, strengthening the Macroprudential Intermediation Ratio (MIR) by including export L/C as a component of financing and gradually introducing regulatory disincentives in the form of MIR-related reserve requirements to stimulate bank lending to the corporate sector and export-oriented businesses.

The Deputy Minister of Finance, Suahasil Nazara, took the opportunity to emphasise that the economic recovery in 2021 is focused on three key aspects.  First, health intervention through a free vaccination program and disciplined application of Covid-19 protocols.  Second, a survival and recovery kit to maintain business continuity and sustainability.  Third, structural reform through the Job Creation Act (No. 11) of 2020.  In addition, the state budget has been designed to restore economic growth in Indonesia through a 22% larger national economic recovery budget totalling Rp699.43 trillion, accompanied by a Rp176.30 trillion health budget, social support totalling Rp157.41 trillion, support for SMEs and the corporate sector totalling Rp184.83 trillion, business incentives worth Rp58.46 trillion and Rp122.44 trillion in priority program support.  Together, those five programs constitute a game changer in 2021.

OJK Commissioner, Heru Kristiyana, reiterated the policy stimuli instituted by OJK during the pandemic to maintain a solid financial services sector and revive the real sector, including loan and financing restructuring.  The orchestration of policies issued by OJK in conjunction with stimuli from the Government and Bank Indonesia has maintained financial system stability, particularly in the banking industry.  As a consequence of stimulus policy, the national banking industry has maintained a high Capital Adequacy Ratio (CAR) of 24.55% (February, yoy), assets totalling Rp9,124 trillion (February) and deposit growth topping 10.11% (yoy).  Nevertheless, policy synergy is required to overcome the current credit contraction by increasing demand in the corporate sector.  OJK is optimistic that the policy response taken to accelerate credit growth will show early signs of success in the second quarter of 2021.

The Vice Chairperson of Commission XI of the People’s Representative Council (DPR), Fathan Subchi, took the opportunity to confirm that government efforts to overcome the pandemic are on track from an economic and health perspective, leading to stronger optimism amongst SMEs and the corporate sector.  Meanwhile, the Job Creation Act is expected to help facilitate SME and corporate sector recovery.

The Chief Executive Officer of LPS, Lana Soelistianingsih, revealed that relatively stable funds in the banking industry pointed to maintained public confidence.  On the other hand, however, LPS hopes to see lower lending rates moving forward to stimulate lending as an important component of the economic recovery.  Seeking to encourage bank lending to the business community, LPS has issued several policy measures, including lending rate reductions of 150bps for rupiah loans at commercial banks and rural banks as well as 75bps for foreign currency loans at commercial banks, while relaxing late payment fines and report deadlines.

 

Media Contact:

Erwin Haryono
Executive Director ​Communication Department​​​
Bank Indonesia

021-131
bicara@bi.go.id

Rahayu Puspasari
Head of Communication and Information Service
Ministry of Finance

021 3846663
mediacenter@kemenkeu.go.id

Anto Prabowo
Deputy Commissioner For Public Relations and Logistics
The Financial Services Authority

021 29600000
humas@ojk.go.id

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