BI Is Confident That The 0 Percent Of Down Payment Can Increase National Consumption, But Only Increase 0.5 Percent

Bank Indonesia (Fofo: Doc. Antara)

JAKARTA - Assistant to the Governor, Head of the Department of Macroprudential Policy at Bank Indonesia (BI) Juda Agung said that the central bank's strategic move to push down payment for credit or motor vehicle financing to a minimum of 0 percent has the potential to boost domestic consumption levels.

"We hope that we can contribute to consumption growth of up to 0.5 percent", he said when giving a presentation to media crews virtually, Monday, February 22.

Juda added that in addition to supporting the automotive sector, the monetary authority also opens space for the property sector to implement the same scheme.

This he revealed based on the results of the BI Board of Governors Meeting (RDG) in the middle of last week which decided to loosen the loan to value ratio for credit and property financing to a maximum of 100 percent for all types of property (landed houses, flats, and shophouses and office houses).

"However, this facility can only be operated by banks that meet certain NPL or NPF criteria while still observing the principles of prudence and risk management", he said.

BI said that the opportunity for vehicle and property ownership with a Down Payment of up to 0 percent was the latest stimulus in growing the demand side in the market. Thus, it is hoped that there will be an increase in consumption, which is the main sector that forms gross domestic product (GDP).

For information, earlier this month the Central Statistics Agency (BPS) released a report that according to expenditure 89.40 percent of GDP in 2020 comes from household consumption and investment.

Household consumption itself contracted by minus 2.63 percent. The low level of public purchasing power is reflected in the retail sales indicator which contracted by minus 12.03 percent.

Then, imports of consumer goods contracted by minus 10.93 percent, and wholesales of passenger cars and motorcycles contracted by minus 50.49 percent and minus 43.54 percent, respectively.