Government Not Required to Put Pressure on Banking Sector
Monday, 08 January, 2007 | 16:57 WIB

TEMPO Interactive, Jakarta: Economists and observers consider that the government does not need to put pressure on the banking sector to reduce investment in State Bonds (SUNs) and Bank Indonesia Certificate (SBIs) and divert their funds to the real sector.

The government should instead issue more conducive investment policy packages so that the real sector is able to grow.

According to Fauzi Ichsan, a Standard Chartered economist, banks will soon reduce their investment in SUNs and SBIs if the industrial sector is already more attractive.

“The government should focus on preparing investment policy packages than putting pressure on banks,” he told Tempo last week.

Fauzi explained that, initially, SUNs were issued in relation to the government's attempt to obtain fresh banking funds when dealing with the economic crisis some years ago.

According to him, there is still a disparity between banking sector optimism and real sector growth.

Real sector growth has been low so far and as a result, banks will not directly disburse their funds in SUNs and SBIs until this disparity between banking and the real sector is minimized.

AGOENG WIJAYA | Anton Aprianto