BI Reveals KLM Incentives For Downstreaming Minerba As Of January 2025 Diverted

Illustration. (Photo: Doc. Antara)

BANDA ACEH - Bank Indonesia (BI) revealed that it has revoked the distribution of incentives for macroprudential liquidity (KLM) policies for the downstream mineral and coal (minerba) sector as of January 2025.

To note, the macroprudential liquidity incentive policy is provided through reducing bank deposits at Bank Indonesia in order to fulfill the Minimum Mandatory Giro (GWM) which must be fulfilled on average.

Meanwhile, the provision of incentives is carried out based on the achievement of bank lending/financing to certain sectors on a targeted basis.

"Hilirization of mineral and coal has not been given as of January 2025," said Director of the BI Macroprudential Policy Department (DKMP) Nugroho Joko Prastowo in a media briefing at the BI Aceh Representative Office, Friday, February 7.

Joko explained that the revocation of the KLM incentive was due to the development of the mineral and coal downstream sector continuing in the banking sector even without the distribution of KLM incentives.

Thus, Joko conveyed that the distribution of KLM incentives would be prioritized to the labor-intensive industrial sector and not capital-intensive so that bank financing would increasingly support the creation of industries that were labor-absorbing.

"The downstream food is still due to entering agriculture. Now the goal is priority sectors that are supported, especially those that are labor-intensive," he said.

"Of course, for our industry, there are many labor-intensive people, automatically industries that have a high portion of growth there will be higher, the business world services sector will increase again because there are incentives there, but not immediately those that are diverted will decrease," he said.

Until the second week of January 2025, BI reported that it had distributed KLM incentives of IDR 295 trillion. This figure increased by 13.8 percent compared to the performance of the distribution of KLM incentives at the end of October 2024, which was IDR 259 trillion.