Lots Of Deposit Funds, Government Will Encourage Private Funds In Banks To Be Channeled To The Productive Sector

Illustration (Photo: Doc. Antara)

JAKARTA - The Coordinating Minister for the Economy Airlangga Hartarto stated that the government will encourage corporate and private funds that are still sitting in banks to get out and channel them to the productive sector.

According to him, this effort is important because it helps the government accelerate economic activity in the country.

"The government is concerned that the private sector is still keeping funds in banks and this needs to be encouraged (to exit)," he said after meeting the President at the Merdeka Palace in Jakarta, Monday, January 30.

According to Airlangga, this strategy can be implemented considering that so far the government has provided relief in the form of credit restructuring for business actors.

"We are monitoring several of the corporations (already) making payments or debt management," he said.

Airlangga himself wants entrepreneurs to be able to continue expanding and strengthening business structures through capital expenditure (capex).

"Of course, we hope that with better debt management, capex can be boosted," he said.

For information, in the last three years there has been a surge in third-party funds (TPF) in banking due to sluggish economic activity during the pandemic.

People choose to deposit their money in financial service institutions when optimism for consumption decreases. This is also the case with the business world, which has decided to park its funds in banks as business expansion has stopped.

As a result, DPK grew to double digits with credit only able to advance in the single-digit range.

This condition clearly makes banking work harder because they have to pay the cost of funds (interest) on these idle deposits.

Moreover, Bank Indonesia's (BI) benchmark interest rate has now risen 225 basis points (bps) in six months to 5.75 percent after previously being at an all-time low of 3.50 percent.

Now the situation is gradually improving with double-digit credit growth and single-digit DPK, although still within a fairly close range.

Data from the Financial Services Authority (OJK) stated that until November 2022 credit grew 11.1 percent year on year (yoy) to IDR 6,347.5 trillion.

Meanwhile, DPK rose 8.7 percent to IDR 7,974 trillion.