ASEAN KEY DESTINATIONS
Property, financing firms push for lower BI Rate
Financing and property firms have demanded that the central bank, Bank Indonesia, lower its interest rate to boost demand in both sectors.
The general secretary of the Indonesian Financial Service Association, Efrizal Sinaga, argued that a lower interest rate would result in reduced credit installments that were expected to increase loan demand.
“To make installments cheaper, the interest rate must be cut. We can’t lower the installment if the rate remains the same,” Efrizal said, as quoted by Antara news agency on Friday.
Efrizal said the previous interest cut did not make a big impact on the financing sector, therefore he hoped the central bank would make another cut as soon as possible given the strong foreign exchange reserve and lower inflation rate.
Bank Indonesia cut its benchmark rate by 25 basis points from 7.75 percent to 7.5 percent in February. Meanwhile, the country’s core inflation in July stood at 4.86 percent or lower than last year’s 5.04 percent.
Echoing Efrizal, the secretary-general of the Indonesian Real Estate Developers Association (REI), Hari Raharta Sudrajat, also hoped that the central bank would lower the interest rate to boost property market growth.
He argued that despite the central bank’s decision to lower property down payments from 30 percent to 20 percent of the total price, the incentive still could not attract people to buy property due to the people’s low purchasing power. At the current rate, the property interest rate is still in the double digits.
“We are now hoping the interest rate will go down to 5 or 6 percent now that the down payment is reduced,” he said.
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