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NEWS UPDATES Asean Affairs     19 October  2011

Indonesian bank lending to slow

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With string signs that a global economic slowdown is coming in 2012, Indonesia’s central bank forecast commercial banks’ loan growth to slip next year.

Halim Alamsyah, a deputy governor at Bank Indonesia, predicted on Tuesday that Indonesian lenders would post a 23 percent to 24 percent growth in loans for 2012. That compares to a 24 percent to 25 percent growth rate for this year, as predicted last week by BI governor Darmin Nasution.

The recent global financial crisis left Indonesian companies wondering how much they will be able to export, making it difficult for them to assess how much they should borrow from banks.

That uncertainty has affected mainly loans denominated in foreign currencies, such as the dollar. Since those types of loans account for only 20 percent to 25 percent of total loans, the impact on total lending will be minimal, according to Halim.

“Loan growth won’t change that much,” Halim said. “Even if it falls, it will only decline slightly.”

New data from BI showed that loans at the nation’s 120 commercial banks in the January-August period rose 23 percent to Rp 2,031.61 trillion ($229.6 billion) from a year earlier. Rupiah-denominated loans accounted for 84 percent of the total.

In 2010 outstanding loans rose 24 percent to Rp 1,742.85 trillion from a year earlier.

Darmadi Sutanto, a director at Bank Negara Indonesia, said global uncertainty had a limited impact on Indonesia’s banking sector. Strong car and motorcycle sales have driven consumer loans, he said, while low interest rates have boosted housing loans.

“Indonesians still want to consume,” Darmadi said. “Our economy won’t change that drastically in a way that consumers would be forced to tighten their belts.

In a surprise move to ensure domestic growth amid global financial turmoil, BI earlier this month lowered its key interest rate by a quarter percentage point to 6.50 percent, citing easing inflationary pressures. It was the central bank’s first action since February, when it raised the rate by a quarter percentage point to 6.75 percent.

Agustinus Prasetyantoko, an economist at Atma Jaya University in Jakarta, said the rate cut has not yet pushed lenders to lower their lending rates.

The prime lending rate — the rate charged by lenders to corporations, retailers and consumers — was still hovering at a range of 7 percent to 20 percent.

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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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