Local companies: lending rates still too high, Indonesia

Local companies: lending rates still too high, Indonesia
Published: 27 June 2010

Indonesian companies say bank lending rates that are well above Bank Indonesia’s benchmark rate are putting them at a disadvantage to their regional counterparts and hampering private-sector growth. 



The central bank has cut its benchmark rate from a record high of 12.75 per cent to 6.5 per cent by last August, its lowest level since its introduction in July 2005. 

But the average bank lending rate was still 12.5 per cent in June, down from 14.43 per cent in January. Domestic companies say this is still not low enough.



The chairman of the Indonesian Cement Producers Association (ASI), Urip Timuryono, said if bank lending rates dropped to below 10 per cent it would reduce monthly operational costs by 10 per cent to 20 per cent, allowing companies to allocate more funding to other needs.