Infrastructure Credit to Rise by End of the Year

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  • Workers toil at the construction site of a new pier at New Priok container terminal in north Jakarta (11/26). Needing some $450 billion spent on Indonesia's infrastructure by 2019, new President Joko Widodo has ordered ministers to give private investors first pick of money-making projects rather than let state agencies grab them as they usually do. REUTERS/Beawiharta

    Workers toil at the construction site of a new pier at New Priok container terminal in north Jakarta (11/26). Needing some $450 billion spent on Indonesia's infrastructure by 2019, new President Joko Widodo has ordered ministers to give private investors first pick of money-making projects rather than let state agencies grab them as they usually do. REUTERS/Beawiharta

    TEMPO.CO, Jakarta - Bank Indonesia (BI) has corrected its credit growth projection for this year by 8.0 to 10 percent. This may increase the allocation of infrastructure projects funding, as a slowing demand for credit will allow banking funds to improve. 

    "By the end of the year, liquidity will be affected by the withdrawal of infrastructure credits," BCA president director Jahja Setiaatmadja said yesterday.

    Read: OJK to Revise Loan Growth Target

    Last week, BI lowered its benchmark 7-Day Repo Rate from 4.75 percent to 4.50 percent. BI governor Agus Martowardojo hopes the interest rate cut could boost credit demand, which only stood at around 8.0 percent in July.

    BI is also considering reducing its loan to value (LTV) rate for automotive and property credit and mulls to include corporate bonds into its loan-to-funding ratio calculation.

    Despite the potential for increase, Jahja said, BCA will still make a careful selection of infrastructure credit applications. Banks will also remain alert of the after effects of BI's rate cut—taking into account bad loans and incoming demand.

    Read: Loan Growth Hits Double Digits: OJK Chief

    Meanwhile, Bank Mandiri said the company would have some certainty over low-cost lending in the next three months at the soonest.  

    According to the Committee for Acceleration of Priority Infrastructure Delivery (KPPIP), there are currently 30 priority projects and 245 strategic projects that will be completed by 2019. To date, 30 projects have been completed, and 129 others are in construction stages.

    IMAM HAMDI | INGE KLARA SAFITRI | ANDI IBNU