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Jakarta (ANTARA News) - Bank Indonesia (BI) Deputy Governor Halim Alamsyah said bank lending to the industrial sector had continued to decline in the past 10 years.

"Credits to the industrial sector in 2001 were still recorded at 41 percent but now it has gone down to only 16.4 percent," he said at a seminar here on Thursday.

The decline was in line with the low growth in the real sector which in the 90s still reached 10 to 15 percent but had now averagely dropped to below five percent.

The figures also matched the decline in the contribution of bank credits to the gross domestic product which earlier reached 40 percent but now only stood at 22 -23 percent.

"What we are worried about is the continuous decline in the past three years. This trend has to be reversed," he said.

One way of preveting de-industrialization was pushing the manufacturing sector into revival by increasing credits to the industrial sector.

It was however lamentable, he said, that according to a BI survey banks had so far even been avoiding doing business with processing industries, he said.

Therefore, he said, BI would strive to make banks increase credits by linking them with minimum reserve requirements.

"We are ready to issue a regulation linking macro-economic issues such as GWM and micro-economic problem in credit distribution," he said.

The new policy, he said, was aimed at boosting extension of credits while keeping banks prudent.

He said the policy needed to be supported by government efforts to improve the industrial sector so that credits distributed there would be absorbed fully.

Halim lamented plans to set up a Financial Service Authority (OJK) which would strip BI of its banking supervision authority and make it difficult for BI to combine micro- and macro-economic instruments.(*)

Editor: Heru
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