OJK to Restrict Foreign Loans for Financing Sector
13 August 2014 14:30 WIB
TEMPO.CO, Jakarta - The Financial Services Authority (OJK) said it will restrict foreign loans by financing companies, in a bid to reduce the risks of loss from currency fluctuations. Firdaus Djaelani, OJK's chief executive for Non-bank Financial Industry Supervisor, said the rules on foreign loans in the finance sector are still quite loose.
"One of the rules is the gearing ratio (debt-to-capital ratio) that still stands on 10 times. We are now reviewing that ratio," he said yesterday.
According to Firdaus, despite the 10x gearing ratio, the highest actualization ever recorded is around five to six times. Restricting foreign loans is also intended to push financing companies to seek for sufficient capital before borrowing. Although currency fluctuations can be anticipated by hedging, the costs are still considered too expensive.
Dumoly Pardede, OJK's supervisory deputy commissioner for Non-Bank Financial Industries, said the restriction does not mean that foreign loans will be completely off limits to financing companies. The rule, he said, is more of a tool to drive financing companies to have a well-structured project plans.
In addition, Dumoly said, a restriction would encourage financing companies to plan their risk management systems better.
FAIZ NASHRILLAH
