The Financial Services Authority Chairman Wimboh Santoso Brings Bad News: Due To COVID-19, The Hotel And Transportation Industry Will Have Difficulty Obtaining Credit

OJK chairman Wimboh Santoso. (Photo: Doc. Antara)

JAKARTA - The Financial Services Authority (OJK) said that industries in the hotel, cafe, and restaurant sector, as well as transportation, will still find it difficult to obtain working capital loans from banks. This is because this industry is one of the economic sectors hardest hit by the COVID-19 pandemic.

Chairman of the OJK Board of Commissioners, Wimboh Santoso, said that due to the COVID-19 pandemic, businesses in the sector were hit by the pandemic. This condition makes banks reluctant to take risks by providing large loans.

"Credit is still difficult, especially for large-scale debtor groups or generally called corporates", he said in a virtual discussion, Tuesday, July 6.

With the condition of economic activity and tourism that is not yet normal, said Wimboh, this type of business will still have difficulty getting funding in the future. Meanwhile, in other sectors, such as food and telecommunications, it is even easier to get credit. Including some of Indonesia's mainstay export commodities in the plantation sector.

"Sectors related to export commodities and so on are certainly not as heavy as those directly affected, especially those related to tourism", he said.

Bank credit growth in the second quarter of 2021 fluctuated. In April 2021, it contracted minus 0.26 percent month to month (mtm) and improved in May to 0.59 percent mtm.

The credit contraction occurred at a time when bank lending rates had shown a downward trend. Under normal conditions, interest rates have a significant effect on credit demand. However, during the pandemic conditions, credit demand stagnated and changes in loan interest rates did not have a major effect on credit demand.

"For this reason, credit growth depends on restoring the confidence of business actors and the normalization of socio-economic activities of the community which leads to the successful handling of the pandemic through accelerated vaccination and discipline in complying with health protocols", he said.