Indonesian banks' loans increase, lower allocation for manufacturing sector

16:37, April 26, 2010      

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Despite overall gains in loans, the latest data from the central bank showed loans to the manufacturing sector declined as of February, local media reported here on Monday.

The loans channeled by Indonesian banks reached 1,428.8 trillion rupiah (158.6 billion U.S. dollars) as of February this year, or 9.8 percent higher from a year earlier, the data issued by the Indonesian central bank (BI) showed.

Meanwhile, the loans to the manufacturing sector declined 13.1 percent to 224 trillion rupiah (about 24.8 billion U.S. dollars) as of February this year from 273.7 trillion rupiah (about 30.3 billion U.S. dollars) a year earlier.

Banks preferred to channel more loans to the mining sector with growing demand for natural resources worldwide, analysts said.

"It is more prudent for banks to lend to the mining sector," Mandiri Sekuritas economist Destry Damayanti was quoted by the Jakarta Post as saying.

The loan to the mining sector increased 40.7 percent to 40.8 trillion rupiah as of February from it was a year earlier.

A BNI economist, Ryan Kiryanto, said that banks would channel more loans mainly to the trade sector and infrastructure projects, in line with the government's plan to boost infrastructure development.

Earlier, a BI survey of 43 commercial banks with headquarters in Jakarta revealed that banks were and would remain reluctant to lend to the manufacturing sector, in particular, the textile industry following the slowing global demand for Indonesian textile products.

The industry ministry said that exports of the textile products had dropped to 9.8 billion U.S. dollars last year from 10.2 billion U.S. dollars a year earlier as the competing countries such as Bangladesh, Vietnam had newer technologies compared to Indonesia.

The BI estimated that loans to expand between 18 to 20 percent this year, BI Deputy Governor Muliaman Hadad said recently.

The banks' loan to the manufacturing sector is highly expected to help employ 17 million workers by 2014.

Local manufacturing industry employed 13.9 million workers last year. According to the Central Statistic Agency (BPS), Indonesia had 194.87 million workers as of August last year with 32.14 million of them were employed.

Source: Xinhua


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