BRI Boss: People's Purchasing Power Can Be Boosted Through The Availability Of Jobs From Infrastructure Development

President Director of BRI Sunarso (Photo: Special)

JAKARTA - President Director of PT Bank Rakyat Indonesia Tbk (BRI) Sunarso said that lowering the benchmark interest rate and lending rate was not the most effective way to boost credit demand, which is currently sluggish due to the pandemic.

"Household consumption and people's purchasing power are the two main keys that can grow credit demand," he said in a webinar organized by the University of Indonesia, Thursday, February 4.

In his explanation, the BRI boss saw that household consumption and people's purchasing power could be supported by the availability of job opportunities.

"So if the government has a plan to continue infrastructure development, I absolutely agree because it means creating jobs," he said.

Sunarso's assumption is strengthened by data on the growth of people's business credit (KUR), which is not only directly correlated with the interest rates charged.

For example, KUR distribution in 2015 with an interest expense of 22 percent was recorded as having a growth of up to 22 percent to 25 percent. In subsequent years, the KUR interest rate was cut to 15 percent with a 7 percent interest subsidy from the government. It turned out that the growth rate only occupied a single digit level.

"Double digit growth only occurred in 2018, the rest will return to single digits. This proves that low interest rates are not the main reference in encouraging intermediation growth, ”he emphasized.

For information, the banking sector is expected to take part in the process of national economic recovery by optimizing lending. This is intended so that these financial service institutions can encourage economic activity through credit facilities with low interest rates.

However, the challenges faced in the current pandemic era are not easy considering that many business actors, especially the big segment, have chosen to postpone expansion. This fact can be seen from the attitude of Bank Indonesia (BI) in revising its credit growth target from an aggressive level to a conservative level.

VOI noted that the monetary authority predicts the growth of national banking intermediation throughout 2021 will range from 5 percent to 7 percent. Whereas BI previously set a target of between 7 percent and 9 percent. Meanwhile, the total lending in 2020 according to the Financial Services Authority (OJK) is IDR5,548 trillion.