Indonesia's industries call for policy support as loans remain costly

12:58, July 06, 2010      

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Indonesia's economy has proved its resilience by emerging from the global financial crisis largely unscathed, but local industries are wary they are losing momentum as access to financing remains too costly, the Jakarta Post quoted an official as saying on Tuesday.

Secretary-general of the Indonesian Entrepreneurs Association ( Apindo) Suryadi Sasmita told the daily that industry-friendly fiscal policies were crucial to spur real sector growth.

"We are still facing sluggishness in the domestic industry as banks remain reluctant to make loans for the labor-intensive manufacturing sector," he said.

Industries said that high cost of funds in the country is a direct result of the government's heavy reliance on the rupiah bond market to finance the budget deficit, and the central bank's inability to encourage banks to increase their lending.

They say the government's fiscal policy, while conservative, has led to overcrowding in the bond market, which in turn has limited room for private companies to issue their own bonds to raise funds.



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