MM FEB UI and Bank Indonesia Present Macroprudential Public Lectures
Nino Eka Putra ~ Humas FEB UI
JAKARTA – Master of Management FEB UI in collaboration with Bank Indonesia held a Public Lecture with the theme “Accommodative Macroprudential Policy Encouraging Economic Financing” at the MM Auditorium, Salemba, on Friday (6/3/2020).
This public lecture was opened by the Chairperson of the Management Department of FEB UI, Arief Wibisono Lubis, who said, FEB UI in particular the S-2 Masters in Management, is committed to continuously improving the quality & insight of its students, among others by holding a series of public lectures delivered by business leaders and policy makers in the economic field with the aim of preparing leaders who have social responsibility and are able to face global change.
General lecture material delivered was ‘Accommodative Macroprudential Policy in Maintaining the Momentum of Economic Growth and Financial System Stability’ and ‘Development of Financial System Stability in DKI Jakarta Province’, moderated by Zaafri Ananto Husodo as Secretary of the PPIM FEB UI Study Program.
Accommodative Macroprudential Policy in Maintaining the Momentum of Economic Growth and Financial System Stability
The Assistant Governor of Bank Indonesia for the Macroprudential Policy Department, Juda Agung as the speaker, explained that the three pillars of Bank Indonesia policy were monetary policies to maintain the stability of the Rupiah value, macroprudential policies for financial system stability (Law 9/2016 PPKSK, Law 9/2016 PPKSK, PBI 16/11 / PBI / 2014 Macroprudential Regulation & Supervision, PDG 17/17 / PDG / 2015 Macroprudential Policy Framework), and payment system policies for the smooth operation of financial transactions and monetary policy transmission.
Macroprudential focuses on the financial system as a whole and has a time series dimension, which is over optimistic when the economy is expanding and over pessimistic when the economy is contracting), and cross section, namely the financial sector is interconnected with each other. “Macroprudential elements consist of banks, corporations, financial infrastructure, households, IKNB, and financial markets,” said Juda Agung.
Macroprudential policy is very much needed in encouraging banks to carry out the intermediation function according to their capacity by providing direction on optimal financing, in the form of a Macroprudential Intermediation Ratio (RIM), by mitigating risks due to under or over financing by banks through RIM Giro.
“Banks that do not carry out their role as intermediaries (under-financing) have the potential to create financial system risks. In addition, banks that are too aggressive in providing financing (overfinancing) also have the potential to create financial system risks,” he explained.
Juda continued, the macroprudential policy mix undertaken by BI, among others, was through refinement of Islamic RIM / RIM by increasing the RIM limit range from 80% -92% to 84% -94% at the Board of Governors’ Meeting in March 2019 and adding the loan / financing component received by the bank, and as a component of funding sources in the September 2019 RDG (effective December 2, 2019), easing Loan To Value / Financing To Value provisions for loans / property financing by 5%, as well as advances for motor vehicles in range of 5% – 10%.
Development of Financial System Stability in DKI Jakarta Province
The second speaker, Executive Director of Bank Indonesia DKI Jakarta Chief Representative, Hamid Ponco Wibowo, said that the stability of the financial system of DKI Jakarta was very well maintained, reflected in the ratio of non-performing loans (NPLs) based on the project location which remained low at 1.72%.
Meanwhile, banks’ Third Party Funds (DPK) are mostly channeled to finance loans outside Jakarta, as seen from the bank location indicator of 95.47%, higher than the project location of 62.42% and the high contribution of Jakarta DPK to Java and the National. In addition, credit growth slowed compared to the previous year. In 2019 project location loans will grow by 5.30% (yoy), slowing from 2018 by 12.39% (yoy).
“In line with general credit growth in DKI Jakarta, MSME credit performance in the fourth quarter of 2019 also experienced a slowdown. So, the DKI Jakarta Provincial Government focuses on advancing MSMEs with policy development programs for aquaculture in the Thousand Islands, chili demonstration plots, go-export MSMEs, go-digital, go-tourism, go-halal, and sharia,” Hamid Ponco Wibowo added. .
Banks in DKI Jakarta are still optimistic that 2020 credit growth will increase. “Based on the results of a banking survey conducted in DKI Jakarta, most banks have not yet reached their credit growth target in 2019, but they are still optimistic that credit growth in 2020 will increase. Corporate lending in 2020 is still prioritized in the main sectors. LTV relaxation has a positive impact, but the high selling property prices are still not comparable with the purchasing power of the people,” he concluded. (hjtp)
