Commission XI Deputy Chair Reveals that the Problem of Himbara is not Liquidity, but the Tenor of SAL Funds

JAKARTA - Deputy Chairman of Commission XI of the Indonesian House of Representatives, Fauzi Amro, explained that the meeting with the banks of the State-Owned Bank Association (Himbara) regarding the placement of the Surplus Budget Fund (SAL) was held in closed session because it discussed information that was considered sensitive and had the potential to affect the market and investment climate if it was published before there was a final decision.

According to Fauzi, a number of discussions in the meeting still require further discussion so that they cannot be conveyed to the public.

In addition, the spread of information that is not final is feared to cause misunderstanding among market participants.

"So what we meant yesterday was, because (there was a discussion) of this SAL data, there are still many considerations, many discussions, we took it so that it was closed," he told the media, Tuesday, July 7.

He explained that one of the main issues discussed was the request of Himbara banks that the placement of SAL funds was not entirely on call or could be withdrawn at any time.

Fauzi added that Perbankan proposed that some of the funds have a longer tenor, around three to six months, even up to one year.

According to Fauzi, the request is based on the characteristics of credit distribution which requires time before generating returns.

"Because of the credit problem, when people take credit, they can't do it for a month or two. He needs 3-6 months. When 3-6 months, it will also affect the return of the credit," he said.

He said that the placement of SAL, which has now been carried out four times, aims to maintain banking liquidity while encouraging credit distribution, especially for productive business sectors and MSMEs.

Fauzi emphasized that the SAL fund is expected to be used as working capital, not just placed in investment instruments such as Bank Indonesia Rupiah Securities (SRBI) which offers higher returns.

Regarding the proposed extension of the tenor, Fauzi said Commission XI of the DPR would discuss it with the Financial System Stability Committee (KSSK) consisting of the Ministry of Finance (Kemenkeu), Bank Indonesia (BI), Financial Services Authority (OJK), and Deposit Insurance Corporation (LPS).

According to him, the discussion is needed to study risk mitigation as well as determine the most appropriate scheme for placing funds.

He emphasized that the main aspiration of Himbara banks was not the addition of SAL funds, but the extension of the period for placing funds to better match the credit disbursement cycle.

"The tenor has been extended. If the addition is definitely they ask to add, that's it. But it depends on the government's readiness for how much percent to add to the SAL that is banked, it depends on the government," he said.

Fauzi also ensured that the problems faced by Himbara were not related to a lack of liquidity, but rather the length of time for placing funds, which was considered too short, making it difficult for banks to manage credit distribution.