Indonesian shipping firms are expected to seek 34 trillion rupiah ($3.70 billion) worth of financing by 2010, with a substantial amount expected to come from banks, a central bank deputy governor said on Monday. Indonesian authorities have urged banks to reduce their excess cash, invested mainly in short-term central bank debt paper (SBIs), and instead use the funds to lend to firms in a bid to boost growth in Southeast
Asia's biggest economy. "The large financing need, government support to strengthen the shipping industry as well the decision to set the industry as a priority industry provide good opportunities for banks to expand loan business," Muliaman Hadad said.
Banks have been struggling to find promising industries to lend to amid worries that non-performing loans might increase because of a host of issues such as difficulties in seizing collateral due to a weak legal system.
Reflecting the difficulties, banks invested around 200 trillion rupiah into short-term SBIs, or about 10 percent of total banking assets, earning around 8 percent compared to some 15 percent from making loans.
Loan growth in the shipping sector outperformed overall loan growth last year, the central bank said.
Indonesia's overall loan growth rose to 25.5 percent in 2007 from 14 percent in the previous year amid strong economic growth due to low interest rates and steady exports of commodities.
But outstanding loans to the shipping industry increased much more sharply, climbing 88 percent to 9.81 trillion rupiah in 2007.
Indonesian banks have forecast loans growth of 24.6 percent this year, more optimistic than the central bank's estimate of 22 percent growth this year, the central bank said earlier this month.
Asia's biggest economy. "The large financing need, government support to strengthen the shipping industry as well the decision to set the industry as a priority industry provide good opportunities for banks to expand loan business," Muliaman Hadad said.
Banks have been struggling to find promising industries to lend to amid worries that non-performing loans might increase because of a host of issues such as difficulties in seizing collateral due to a weak legal system.
Reflecting the difficulties, banks invested around 200 trillion rupiah into short-term SBIs, or about 10 percent of total banking assets, earning around 8 percent compared to some 15 percent from making loans.
Loan growth in the shipping sector outperformed overall loan growth last year, the central bank said.
Indonesia's overall loan growth rose to 25.5 percent in 2007 from 14 percent in the previous year amid strong economic growth due to low interest rates and steady exports of commodities.
But outstanding loans to the shipping industry increased much more sharply, climbing 88 percent to 9.81 trillion rupiah in 2007.
Indonesian banks have forecast loans growth of 24.6 percent this year, more optimistic than the central bank's estimate of 22 percent growth this year, the central bank said earlier this month.