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Having gone through years of slow, painful and costly
recovery since the 1997-1998 monetary crisis, the country's banking
sector is now ready to take the lead in supporting economic growth,
Bank Indonesia Governor Burhanuddin Abdullah said Monday.
In a keynote speech at the Asian Bankers Summit, being held March 25-28
at the Shangri-La Hotel in Jakarta and attended by hundreds of bankers
from across the Asia Pacific, Burhanuddin said Indonesia's banking
sector has come a long way since the crisis, when the government was
forced to inject huge amounts of public funds into the industry to
prevent its collapse.
The central bank, he said, has improved the industry's regulatory
framework, having launched in 2004 the Indonesian Banking Architecture
(API), a definitive blueprint to create a stronger and more robust
banking sector.
He said the API laid out such best practices as good corporate
governance and risk management -- the lack of which was partly to blame
for the crisis. The API also incorporates a policy road map for mergers
and acquisitions, to pare down the country's 130 lenders into fewer
banks with stronger capital.
"With all this, the banking industry should now be able to return to
its basic function of intermediation, of disbursing more lendings to
support higher economic growth.
"This the main challenge now, and the challenge of intermediation is
not Indonesia's alone, but also in other countries having experienced a
crisis," he said.
Bank lending in Indonesia grew by 14 percent to Rp 792.3 trillion last
year, as high inflation and interest rates since 2005 dampened loan
demand. Lending had averaged 20 percent growth the previous two years.
Many bankers attending the event acknowledged that Indonesia's banking
sector has recovered from the crisis
Summit director Fiona Shaw said the Indonesian banking sector had made
tremendous progress since 1997 through a series of mergers,
acquisitions, consolidations and fairly successful micro-financing
schemes.
"We would like to, in a way, make Indonesia a showcase for other
developing countries, to learn from the success achieved by the banking
sector here.
"We decided to pick Jakarta (for the summit venue) because we thought
it was time to showcase the progress to the rest of the world," Shaw
said.
The summit itself is a multifaceted event that involves visits to local
banks, an awards ceremony that will bring together bank CEOs from
across the region and three key conferences on the different aspects of
the industry: risk management and governance, cash, and treasury and
trade.
In addition, the technology council will hold its annual meeting.
As part of efforts to showcase the progress of Indonesia's banking
industry, all summit participants are scheduled to visit the
headquarters of the state Bank Rakyat Indonesia (BRI), to hear about
its success with microfinancing schemes.
During the summit's opening ceremony Sunday, BRI small and medium
enterprises director Sulaiman Arif Arianto said the bank was committed
to allocating 80 percent of its total loans for micro-credits this
year, and the remaining 20 percent for corporation projects.
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