Jokowi Urges Regional Banks to Improve Capital Structure

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  • TEMPO.CO, JakartaPresident Joko Widodo (Jokowi) has called on Regional Development Banks (BPDs) to improve their capital structure in a bid to boost performance.

    "Internal transformation is needed, (and) capital structure should be improved. Governors must not hesitate to conduct capital participation, and the regional legislative assemblies must ease their approval," he remarked during the launch of the BPD transformation program at the state palace on Tuesday.

    The president stressed on the need to improve internal management, so that with increased capital, the BPDs can introduce innovations in their operations.

    "With regard to their core business, I request that special attention be given to micro, small, and medium businesses (UMKM) to enable them to enter the productive real sector and not solely operate in the consumer sector," he emphasized.

    Besides increasing their capital, the BPDs must also be able to operate not only at the local level but also at national and international levels, he affirmed.

    The transformation program is being implemented by the Association of BPDS (Asbanda) in cooperation with the Financial Services Agency (OJK).

    The OJK and Asbanda have formulated a holistic framework for the transformation program for balancing the aspects of business, risks, and support.

    The three set targets are improving competitiveness, strengthening institutional resilience, and increasing contribution to regional development.

    In order to achieve them, the six formulated strategies are product development, fishermen management, marketing development, network management, portfolio management, and strengthening liquidity and capital.

    To implement the program, five transformation work streams have been set up: strategic BPD group, human resource development, produce and service development, strengthening corporate governance and risk management, and development of technology and information systems.

    By March 2015, the assets of BPDs reached Rp498.951 trillion, up by 22.39 percent as compared to Rp407.669 trillion recorded in March 2014.

    According to the Indonesian bank statistical data, BPDs credit performance has also shown improvement. Until March 2015, their credit position was at Rp304.492 trillion, up from Rp269.410 trillion last year.

    Their third-party funds across Indonesia by March 2015 reached Rp410.781 trillion, up from Rp320.552 trillion last year.

    According to General Chairman of Asbanda Eko Budiwiyono, looking at the figures, BPDs across the country are optimistic that they could develop to become stronger and more competitive banks and will be able to contribute more significantly.

    The event was attended by OJK Chief Muliaman Hadad, Finance Minister Bambang Brodjonegoro, and the heads of BPDs across the country.