Jakarta (Antara Bali) - The latest decision by Indonesian central bank to lower its BI rate must also be followed by the banking sector reducing lower lending rates to spur growth of small and medium businesses.
"Without the banking sector lowering lending rates, the small businesses will be incapable of improving their businesses due to the high interests they (Small and Medium Enterprises) pay," said member of the House of Representatives Commission XI Muhammad Firdaus, on Monday.
Bank Indonesia (BI) has taken efforts to cut the benchmark interest rate to encourage national banks to follow suit, as lending rates in the country is still about 12 per cent, while foreign loan interest rates is about three to four per cent.
Firdaus said that it is the right time for the national banks to give the SMEs an opportunity to compete with large companies, which due to their strong financial security are able to meet the high interest rates, while SMEs do not have access to funds other than bank loans.
"Considering that SMEs' number is bigger than major companies in the country, the sector would make larger contribution to the economic growth which has been proven during the 1998 monetary crisis," he said.(IGT)
