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NEW UPDATES Asean Affairs  21  August 2014  

BPDs lack access to new capital

Access to new capital and corporate governance continue to be the biggest challenges that Indonesia’s regional banks (BPDs) face in supporting their rapid growth in loans, according to Fitch Ratings in its latest report.

The financial positions of the regional governments in Indonesia, which are the major shareholders of the regional development banks, known as Bank Pembangunan Daerah (BPDs), are considered weak, limiting the capital they can provide to the banks, the rating agency said.

In addition, many of the regional development banks do not have appropriate corporate governance, mainly because of weak internal controls, poor accounting practices and ineffective risk management.

Intervention from regional governments also makes it difficult for the banks’ management teams to conduct business prudently. There are 26 BPDs in 31 provinces in Indonesia. Although they have high market shares in their respective regions, their contribution to the overall banking system remains small: about 8 percent of total banking assets as of the end of 2013, the rating agency said.

Fitch’s ratings on the banks reflect the potential support they may receive from the central government through the regional governments. The BPDs are important to the central government, which use them to channel funds to pay civil servants and finance government special projects. Their importance will grow as Indonesia’s regions contribute a larger share to national revenues, Fitch said.

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This year in Thailand-what next?

AseanAffairs   04 January 2011
By David Swartzentruber      

It is commonplace in journalism to write two types of articles at the transition point between the year that has passed and the New Year. As this writer qualifies as an “old hand” in observing Thailand with a track record dating back 14 years, it is time take a shot at what may unfold in Thailand in 2011.

The first issue that can’t be answered is the health of Thailand’s beloved King Bhumibol, who is now 83 years old. He is the world's longest reigning monarch, but elaborate birthday celebrations in December failed to mask concern over his health. More






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