Tuesday, 7 August 2012


Development of Indonesia’s banking sector performance by end of first Semester this year had been quite impressive. One of the criteria was credit growth which was projected to grow in the range of 26% - 28%. This projected was a reflection of credit stability which was posted at 25% last year.

Not less noteworthy was pipelining of credit investment in the banking sector up to May 2012 last which managed to grow by 19.45% to become Rp 508.76 trillion against same period of 2011.

Data of Bank Indonesia had it that growth of credit investment in the infra structure sector had reached 30.9% or above that of the average growth in the industrial sector. There were three economic sectors which offered greatest credit investment.

The electricity, gas and water sectors were the economic sectors with highest credit investment growth, i.e. 47.9 % to become Rp 38.41 trillion till May 2012 against Rp 25.97 trillion in May 2011.

Meanwhile investment credit for the construction sector rose by 23.23% to become Rp 20.32 trillion against the previous Rp 16.49 trillion. Lately, credit investment to the transportation and communication sector rose by 21.57% to become Rp 62.66 trillion against the previous Rp 51.54 trillion. The means that the average credit growth of the three sectors reached 30,9%.

Beyond infra structure, pipelining of investment credit to the sectors of trading, hotel, and restaurant booked increase above the average of industry, i.e. 44,04% (year-on-year) to become Rp 88,27 trillion till May 2012. The sectors of mining and excavation also grew high, i.e. 36,98% (year-on-year) to become Rp 36.3 trillion.

It was noteworthy that investment financing to the infra-structure sector: electricity, construction were expected to serve as stimulus of better economic growth. Some upper level banks had been actively involved in credit pipelining to the infra-structure sector.

Evidently Bank Mandiri, Bank Negara Indonesia (BNI), Bank Rakyat Indonesia (BRI) and Bank Central Asia (BCA) served as joint Mandated Lead Arranger for financing syndication for PT Jasamarga Bali Toll worth Rp 1,74 trillion. In this case Bank Tabungan Negara (BTN) and Bali Regional Development Bank became member of the syndicate.

Jasamarga Bali would use the fund for development of 10 kilometer long Nusa Dua-Ngurah Rai Benoa toll road section. Bank Mandiri with BNI and BRI jointly extended credit of Rp 455 billion each for that project, BCA contributed Rp 200 billion, BTN 104.3 billion and BPD Bali ectended Rp 100 billions.

Until May 2012 Bank Mandiri’s financing for the infra structure sector reached Rp 29,96 trillion, up by 28,6% against same period of previous year at Rp 23.39 trillion. The portion for toll road financing was posted at 35,58% or Rp 28.6 trillion, growing by 6.4% against May 2011 which was Rp 20,02 trillion.

Still related to basic infra-structure, it was known that the Central Java Regional Development Bank (Bank Jateng) and BPD Bali had allocated fund of Rp 300 billion for developing Regional Drinking Water Company (PDAM). With additional fund from the two BPD toral bank credit for PDAM this year came to Rp 4.5 trillion.

Value wise, the group of private banks dominated credit pipelining. The portion of credit investment of private banks was posted at 55.54% or Rp 282,56 trillion. Company Bank (persero) was in second place the portion being 28.42% or Rp 144,61 trillion.

In terms of growth level, the group of foreign banks and joint venture banks booked highest growth of 42.32% (year on year) to the level of Rp 56.46 trillion although by portion they were only in third place. The private banks were in second place with growth of 31.15% (year on year).

It was regrettable that commitment of the banking sector in extending credit to the infra-structure sector in extending credit to the infra-structure sector was not accompanied by maximum liquidating process. All in all, low absorption of the infra-structure sector was the very obstacle that stagnated pipelining of credit to that sector.

The reason was because in the execution of the multiyears project, the credit extended was not totally drawn by the debtor. Until April 2012, the value of undisbursed loan reached Rp 719,5 trillion. Of that amount around Rp 272,79 trillion was bank’s committed credit while Rp 447.222 trillion was uncommitted loan.

The banks predicted that this year’s undisbursed loan would be liquidated, provided that Government’s infra structure programs run as planned. The slow process of credit pipelining was not on account of bank’s reluctance but because the debtors were still facing evectional problems such as hard land clearing (usually caused by land dispute and difference in buying price) or slow and complicated bureaucracy in the regions.

Therefore the Government as facilitator and regulator must instantly solve the problem faced by investors at the infra structure project so credit liquidation would be more and application for credit would increase.

Amidst uncertainty of the word’s economy today it was best for the Government and Indonesian banking sector to focus on infrastructure building to anticipate any possible recovery that might happen in the next two year. By the time the world’s economy recovers, the economic machine would be ready to roll thanks to adequate infra-structure.

Business News, Wednesday, July 18, 2012

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