Indonesia: Banks prefer to disburse loans to state-owned enterprises

• Jun 25, 2019

A number of bankers have acknowledged that they favor state-owned enterprises (SOEs) when disbursing loans, with SOEs accounting for almost 30 percent of funding recipients, the maximum quota allowed by the Financial Services Authority (OJK).

The lenders claim that the loans were largely disbursed to finance the government’s infrastructure projects across the country.

State-owned lender PT Bank Tabungan Negara (BTN) compliance director Mahelan Prabantarikso said BTN’s loan disbursement to SOEs had not exceeded the quota, but he called on the OJK to relax the regulation because infrastructure projects needed large amounts of funding.

Meanwhile, state-owned lender PT Bank Mandiri corporate director Royke Tumilaar admitted that the lending disbursed to SOEs was close to the quota stipulated by OJK.

He said, as quoted by kontan.co.id, that the bank was involved in financing a number of the government’s giant infrastructure projects implemented by several SOEs.

A similar statement was made by the chief economist of private lender PT Bank Central Asia (BCA) David Sumual. To address the issue, David called on the government to give a greater share of infrastructure projects to private construction companies.

State-owned lender PT Bank Negara Indonesia (BNI) deputy president director Herry Sidharta said BNI had its own policy about the size of funding for SOEs, which was 5 percent lower than the OJK quota.

Asset management firm Samuel Aset Manajemen economist Lana Soelistianingsih called on the OJK to maintain the existing quota of 30 percent quota so that SOEs would not rely solely on bank loans to finance the infrastructure projects. (bbn)

Source: https://www.thejakartapost.com/news/2019/06/25/banks-prefer-to-disburse-loans-to-state-owned-enterprises.html