50 Banks Unsound

Sep 28th, 2006, in Business & Economy, by

Bank Indonesia says there are fifty banks in the country which are in an unhealthy state.

Bank Indonesia (BI) governor Burhanuddin Abdullah said that of the 131 private banks in Indonesia a full fifty were uncompetitive because the value of their assets was too low. He told the Banking Commission of the House of Representatives on the 25th:

They are too small and it's difficult for them to compete domestically or especially overseas.

He urged that such problematic banks find a way to shore up their positions or consider merging.

Burhanuddin Abdullah went on to say that there were too many banks in Indonesia. Prior to a change in the law in 1988 there were 132 banks and this number had grown to 240 by the time of the onset of the Asian economic crisis of 1997-98. The number of banks then fell to 100, rising to 131 at present.

He mentioned that Indonesia's neighbours had far fewer banks: Malaysia ten banks, Japan four, Australia about five, and Thailand less than ten. Although their number was few banks in neighbouring countries were able to spur on economic growth.

He concluded with the hope that by 2010 the number of banks in the country would have fallen to about 70 or 80, and that each bank would have a minimum asset level of 100 billion rupiah.


One Comment on “50 Banks Unsound”

  1. avatar Dragonwall says:

    1 USD = @10,000 Rp so 100 billion rups = 10 million USD? Wow what kind of sh*t is that and the BI governor had the cheek to make such a statement.
    For a bank to withstand the strain such as the economic situations in Indonesia should have at least 200 million USD = 2 Trillion rups.
    It is about time the BI get the banks to merge and consolidate before another economic crisis occur.
    The state of such banks are a burden to the Indonesian economy. When the pressure of economic threats appears, BI can’t help. BI itself will lose even more mony when the bubbles burst in the US 2 the year 2016.
    @ 1996 US was in the deficit of around 30T US. They zero out by using Bills & Bonds from the US Treasury and a much orchestrated help from Soros in sabotaging the Asian economy that depletes most of Asian currency value.
    BI understands the problem but is not taking quick action to rectify the weak situation while there is still ample time now. I suppose they are waiting for for the ice to crack and another meltdown to occur.
    Indonesia had a lot of incompetent ministers and people in politic. Just talk and no action.
    This is what I termed as Indonesia’s hope of the rupiahs coming down to 7,500 is a dream. The next level of an economic crunch will put the level of rupiahs to stabalize around 11,000 to 12,000 to be precise.
    The meltdown in the US is beginning to show signs like the crash of stocks and share market, increasing foreclosure on default on mortgage payments. The sliding or price of properties and economic slowdown.
    US dollars react sharply to oil and gold and not Asian currencies. But the Asian currencies reacted on the performance of the USD. Asian currencies only affects the USD slightly and no major impact.
    Like I once told Sputjam the Indonesian government should have an investment arm to help the rupiahs handled by specialist to help level the rupiahs to around 7,500. Once 7,500 is insight then the possibility of pushing it to around 6,000 will strengthen Indonesia’s economy. Burhannurdin and that lady in the BI is still not cut for the job. they lack the kind of decisive implementation.
    This investment is not fighting with local companies. They are actually investing on foreign shores supplementing the losses incur by BI and Indonesia’s economic deficit.
    To have this funds allocated they only need to cut down arms and military from the APBN and APBD. These are hard time and they need to bear with the government in the meantime. Increase tax on dutiable items, ensure company and income tax properly implemented. Encourange more made in Indonesia. Reduce car import and implement more stringent law on car usage like in Singapore. ERP etc. After the dark period is over then open up Indonesia to the world. Like the Chinese saying take a stp backward and the horizon opens up.

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