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Policies in the banking industry are more focused on various measures to reinforcing the condition of the national banking industry. This is a continuation of banking restructurization programs in the context of making the banking industry recover. The measures put a stress on sustained efforts to recover its intermediary role. They are also aimed at improving the banking system through among other things enhancement of banking good corporate governance, and improvement of banking regulations and control. This includes the betterment of banking services innovations such as mobile banking services via the growing popular cellular phones.
In line with more favorable monetary condition, some indicators in the banking industry have shown heartening improvements. Banking intermediary function has slightly improved further as the growing third party funds and higher credit position reflect, so this needs to be optimized. Other banking indicators such as net interest margin (NIM) has been persistently growing; non-performing loans (NPLs) relatively low; banks' capital and profit ratio relatively stable; and capital adequacy ratio (CAR) improving.
BNI Branch office in Medan, North Sumatra |
At the first quarter of 2004 (March 2004), banks' total assets amounted to Rp1,150.0 trillion. Meanwhile, third party funds shrank by Rp11.5 trillion to reach Rp877.1 trillion. At the same time, credit position stood at Rp477.30 trillion. New credit during the first quarter of 2004 was amounting to Rp4.3 trillion, some 53.9 of which went to small-and-medium establishments (SMEs). By type of usage, the new credits had been channeled for working capitals (45.6 percent), investment (24.3 percent) and for consumption (30.1 percent). Loan-to-deposit ratio in March was recorded at 43.7 percent, growing from 42.9 percent in the previous month.
Reflecting improved banking performance had been net interest income that grew from Rp3.2 trillion in the third quarter of 2003 to Rp5.1 trillion in the first quarter of 2004. The increase was mainly due to the increase of credits and the declining tendency of credit interest.
In general, banks' capital adequacy ratio (CAR) in the first quarter of 2004 was well above the minimum level, namely around 23.2 percent, up from 19.4 percent in the previous quarter. During the year 2003 the average CAR level was around 23 percent, higher than that of 2002 at 21 percent. The central bank's minimum requirement was set at eight (8) percent.
Until June 2002, the number of bank offices was recorded at 14,300. The country's major banks are Bank Mandiri, which in March 2004 had a total asset of Rp239,383 billion; Bank Central Asia (BCA) which had a total asset of Rp 136,139 billion; Bank Negara Indonesia (BNI) Rp125,078 billion, Bank Rakyat Indonesia (BRI) with its total asset of Rp 94,503 billion, Bank Danamon with total asset of 54,887 billion, Bank International Indonesia (BII) with its total asset of Rp29,769 billion, Lippo Bank Rp 26,090 billion, Bank Tabungan Negara (BTN) Rp 25,623 billion, Bank Niaga Rp 23,393 billion, and Citibank with total asset of Rp 23,012 billion.
In addition, there are also several overseas banks' representative offices operating in the country's major cities. Those banks include Bank of America, Bank of Tokyo, Hong Kong Bank, Amro Bank, Standard Chartered Bank, Thai Bank, etc.
BANK INDONESIA
Previously, Bank Indonesia, the country's central bank, was regulated under Law No. 11 of 1953. However, since the issuance of Law No. 23 of 1999, which has been amended by Law No. 23 of 2004 on Bank Indonesia, the bank operates under the Law that allows it the status and position as an independent state institution, free from any interference by the Government and other external parties. It means that the bank is fully autonomous in formulating and executing each of its task and authority as the Law regulates.
As it is governed, the Bank Indonesia has one single objective: to achieve and maintain stability of Rupiah, the country's currency. To pursue the objective the bank has the task: to formulate and implement monetary policy; regulate and ensure a sound payment system; and regulate and supervise the national banking system.
The Bank's accountability and transparency take the form of open information pertaining the evaluation of monetary policies having been executed in the previous year, and policies being planned for next year as well as their targets for the public. Such information is also reported to the President and the House of Representatives (DPR).
In relation with the Government, the bank assists the printing and placement of government securities to finance the State Budget; acts as the cashier to the government and administrator of government account at the Bank Indonesia, and accepts, upon request by the Government, foreign loans for and on behalf of the government.
STATE-OWNED ENTERPRISES
The meaning of a state-owned enterprise (BUMN) in general term is a corporate body outside of the Bank Indonesia, with no-less-than-51 percent share of which must be owned by the government, and a joint-venture in which all shares are owned by the government together with local governments or other state-owned enterprises without taking the composition of the government ownership into account.
The Office of the Minister of State-owned Enterprises supervises state-owned enterprises, numbering 160 establishments in 2003. Privatization schemes are still underway to broaden public ownership, improve their efficiency and productivity, and revive finance and management in order to augment their outputs and products' competitive edge. Those 160 establishments do businesses in the sectors of manufacturing, trade, construction services and consultancy, transport, communications, tourism industry, financial services, agriculture, plantations and forestry as well as public services.
They are grouped into large, medium, and small undertakings. So far, there are four large state-owned enterprises which possess assets worth over Rp 50 trillion, six enterprises with assets worth from Rp10 trillion to Rp 50 trillion; while medium enterprises own assets worth ranging from Rp5 trillion to Rp10 trillion. Among the large enterprises are PT. Telkom Indonesia Tbk, Bank Rakyat Indonesia, Bank Mandiri, Bank BNI, PT. Pupuk Kujang, PT Aneka Tambang Tbk, PT. Petrokimia Gresik.
In 2001, the total assets of those state-owned enterprises were estimated to reach Rp849.19 trillion, and their whole capitals amounted to Rp249.2 trillion. Their net profits in 2000 were Rp13.3 trillion and in 2001 were estimated at Rp26.9 trillion. In 2003, those state enterprises were estimated to gain profit of Rp28 trillion. Meanwhile, up to March 2004, gains of BUMN privatization schemes having been deposited to the state treasury amounted to Rp3.2 trillion out of the targeted Rp5 trillion. Realization of such privatization schemes in 2002 and 2003 was Rp7.7 trillion and Rp7.3 trillion respectively.
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