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FINANCE MINISTER BELIEVES TRADE WAR WILL NOT ERODE RI’S CREDIT GROWTH

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The construction sector grew 27.55 percent (yoy), while the agriculture and processing sectors grew 10.65 percent and 8.7 percent (yoy), respectively.

Greatindonesia.co.id, Jakarta – Finance Minister Sri Mulyani Indrawati believes that the intensifying trade war between the United States (US) and China will not have a significant impact on the growth of bank credit in Indonesia, which is a guideline reflecting the expansion of the business world.

“The credit is still very positive, so far. Especially for investment loans and working capital, as stated by Pak Wimboh, Chairman of the Board of Commissioners of the Financial Services Authority, just before Lebaran (post-fasting festivities),” said Sri Mulyani at the working meeting of the House of Representatives’ Budgetary Agency in here on Tuesday (11/6/2019).

The former Managing Director of the World Bank said the growth of bank credit was assisting in the recovery and growth seen in the middle of this year, after weakening in recent years.

The minister also said she hoped the momentum in growth will continue throughout 2019.

This condition will be realized if the momentum of domestic economic growth is maintained, and is able to counteract the impact of the economic slowdown due to a trade war between two economic giants, the US and China.

“Of course, overall economic growth must be maintained so that the optimism of business people will remain positive so that they will be able to increase their business volume,” she said,

As for April 2019, according to the Financial Services Authority (FSA), credit growth still grew at 11.05 percent on an annual basis (yoy).

In the growth of credit, investment credit grew by 14.34 percent (yoy), working capital loans 10.48 percent (yoy), and consumption loans grew 9.06 percent (yoy). The swift credit distribution was driven by the mining sector, which grew to 37.6 percent.

In addition, the construction sector grew 27.55 percent (yoy), while the agriculture and processing sectors grew 10.65 percent and 8.7 percent (yoy), respectively.

The bank credit risk, as of April 2019, is at a low level. This is reflected in the ratio of bad loans or non-performing loans (NPLs) to gross banks of 2.57 percent and net NPLs of 1.15 percent.

Meanwhile, the Capital Adequacy Ratio (CAR) was 23.78 percent, and the loan-to-deposit ratio (LDR) decreased to 93 percent from 94 percent. (azm)

FINANCE

GOVT’S EXTERNAL DEBT MANAGEMENT PRIORITIZED TO FINANCE DEVELOPMENT : BI

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Such developments showcased a solid structure of Indonesia’s external debt in spite of an uptick in its position.

Greatindonesia.co.id, Jakarta – The government’s external debt management was prioritized to finance development, dominated in productive sectors to drive growth, in addition to boosting public welfare.

Public welfare improvement encompassed the human health & social work activities sector, constituting 19 percent of the government external debt; construction sector, 16.4 percent; education sector, 16 percent; public administration & defense sector, 15.2 percent; and financial & insurance sector, 13.9 percent, according to Bank Indonesia’s (BI’s) statement here on Monday (16/9/2019).

The private external debt rose in line with the investment requirements in several leading sectors.

The private external debt outstanding at the end of July 2019 increased 11.5 percent (yoy), an 11.1 percent yoy rise than that of the previous month.

The increase principally stemmed from the issuance of global bonds by non-financial corporations.

Private external debt was dominated by the financial & insurance sector; manufacturing sector; electricity, gas, & water supply sector; and mining & drilling sector. The share of external debt in these four sectors to the total private external debt reached 76.6 percent.

Indonesia’s external debt maintained a healthy structure, backed by the prudential principle application in its management.

The condition was mirrored in, among others, Indonesia’s external debt-to-gross domestic product ratio at the end of July 2019 at 36.2 percent, down from the previous month.

In addition, Indonesia’s external debt structure continued to be dominated by long-term debt, constituting 87.6 percent of the total external debt.

Such developments showcased a solid structure of Indonesia’s external debt in spite of an uptick in its position.

BI, in close coordination with the government, has continually monitored external debt by promoting the application of prudential principles, in its management to maintain a healthy external debt structure.

Furthermore, the role of external debt will be optimized in supporting development financing without incurring the risks that may impact macroeconomic stability. (akm)

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FINANCE

INDONESIA’S STOCK, BONDS MARKET ATTRACTIVE : INVESTMENT STRATEGIST

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Amidst the current low interest rates, Indonesian bonds are very attractive because they still provide high yields.

Greatindonesia.co.id, Jakarta – The Indonesian stock and bond market remains an attractive option amid the global economic turmoil, an investment strategist at an asset management corporation in Indonesia believes.

“The stock market still provides attractive investment opportunities because of its valuation. There is also the potential growth of the corporation’s profit which is estimated to be around nine percent this year,” the Chief Economist and Investment Strategist Manulife Asset Management Indonesia, Katarina Setiawan, said in a statement received here, Monday (16/9/2019).

Going forward, there are several catalysts for the stock market, including further interest rate cuts by Bank Indonesia, accelerated policy reforms by the government, improved data on economic activity, and corporate tax cuts, she stated.

Amidst the current low interest rates, Indonesian bonds are very attractive because they still provide high yields.

“The central bank’s commitment to safeguarding the Rupiah exchange rate and the bond market provides a positive sentiment for Indonesian bonds,” she said.

Turmoil and volatility in the financial markets are not uncommon, she said advising investors to always keep an eye on every development.

“Keep in mind that there are always opportunities in every condition, even amidst high global volatility. Do not be afraid to invest and adjust your investment portfolio, with targeted investment objectives and time frames,” she said. (INE). (cta)

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RUPIAH WEAKENS OVER CONCERN ABOUT GLOBAL RECESSION

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The Indonesian currency fell 18 points, or 0.13 percent, to close at Rp14.053 per US dollar compared to Rp14.035 earlier.

Greatindonesia.co.id, Jakarta – The rupiah weakened against the US dollar in the Jakarta interbank market on Tuesday evening over fears of a global economic recession.

The Indonesian currency fell 18 points, or 0.13 percent, to close at Rp14.053 per US dollar compared to Rp14.035 earlier.

“The market still has doubts about it and is waiting for certainty about the monetary policy from the meeting of the European Central Bank (ECB) that will be made known Thursday,” PT Garuda Berjangka President Director Ibrahim Assuaibi said in Jakarta Tuesday.

The ECB is expected to slash the deposit interest rate and offer stimulus including the buyback of bonds.

As reported earlier, factories in the European zone particularly Germany are struggling to withstand growth slowdown as a result of the US-China trade war. Hence, ECB President Mario Dragh will not remain silent from attempts to stabilize the European economy.

On the internal side, if the market remains volatile as a result of the trade war and Brexit, the central bank will again intervene in the market through a monetary policy mix to make the market attractive, Ibrahim believed.

“Looking ahead, BI (Bank Indonesia) and the government will continue to encourage the economy, take pre-emptive measures and be vigilant against the global condition and make a policy to facilitate foreign investment in the country,” he said.

The rupiah strengthened Rp14.030 against the US dollar Tuesday morning. Throughout the day, the rupiah hovered between Rp14.026 and Rp14.055. (ctr)

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