Ada Pertanyaan? Hubungi Kami 
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Ada Pertanyaan? Hubungi Kami Fathat Qorib, Robert Sidauruk
Following a letter from the Commission for Supervision of Business Competition (KPPU) suggesting the Financial Services Authority (OJK) address the issue of high interest rates for small and medium enterprises (SME), the OJK has responded by proposing a permanent regulation to reduce interest rates for the sector.
“First is to find the source of problem, and we are open to the possibility of issuing a regulation to address this issue,” says Muliaman D. Hadad, Chairman of OJK’s Board of Commissioners.
Before putting forward a new regulation on interest rates for SME, Mr. Hadad suggested conducting a joint field assessment between the OJK and KPPU.
Although the suggested joint assessment is yet to commence, both the OJK and KPPU share the same point of view that high interest on loans to SMEs may lead to unfair business competition within the banking sector amongst the providers of loans for SMEs. Both institutions have indicated their similar perception on this issue in the Memorandum of Understanding(MoU) signed between them earlier this week.
“However, details of the actions to be taken have not been decided yet,” added Mr. Muliaman.
Mr. Hadad continued explaining that the majority of people are not being provided complete information on loan interest for SMEs. Based on an OJK’s survey, the public is not familiar with Bank Indonesia Circular Letter No.15/1/DPNP, which regulates transparency on the prime lending rate by banks that must be announced on a regular basis to public. As a result, members of the public do not usually compare the interest rates from one bank to another.
“Most of the public does not have complete information on prime lending rate,” said Mr. Hadad.
The letter sent by the KPPU on this issue was received by the OJK on 24 June 2014. In the letter, the KPPU addresses the current high interest rates for SMEs, resulting from the fact that banks consider disbursing loans to this sector as risky.
The KPPU further suggested to the OJK to address the matter through three approaches. As a start, the OJK could stipulate more measurable processes for determining the loan risk premiums by banks. Second, the OJK could establish an independent institution to determine loan risk premium levels. Third, the OJK in its capacity as a regulator could determine loan risk premium levels.
Commenting to the current situation, M. Nawir Messi, KPPU’s Chairman asserted that the high interest rates for SME has created unfair competition between banks. Based on these circumstances, the OJK and the KPPU agreed to enter into the MoU to strengthen supervision of business competition in the financial services sector.
“When it comes to the SME sector, only a few banks are competing to provide loans to this sector in several regions,” concluded Mr. Messi.
(hot/kc)
Fathat Qorib, Robert Sidauruk
Following a letter from the Commission for Supervision of Business Competition (KPPU) suggesting the Financial Services Authority (OJK) address the issue of high interest rates for small and medium enterprises (SME), the OJK has responded by proposing a permanent regulation to reduce interest rates for the sector.
“First is to find the source of problem, and we are open to the possibility of issuing a regulation to address this issue,” says Muliaman D. Hadad, Chairman of OJK’s Board of Commissioners.
Before putting forward a new regulation on interest rates for SME, Mr. Hadad suggested conducting a joint field assessment between the OJK and KPPU.
Although the suggested joint assessment is yet to commence, both the OJK and KPPU share the same point of view that high interest on loans to SMEs may lead to unfair business competition within the banking sector amongst the providers of loans for SMEs. Both institutions have indicated their similar perception on this issue in the Memorandum of Understanding(MoU) signed between them earlier this week.
“However, details of the actions to be taken have not been decided yet,” added Mr. Muliaman.
Mr. Hadad continued explaining that the majority of people are not being provided complete information on loan interest for SMEs. Based on an OJK’s survey, the public is not familiar with Bank Indonesia Circular Letter No.15/1/DPNP, which regulates transparency on the prime lending rate by banks that must be announced on a regular basis to public. As a result, members of the public do not usually compare the interest rates from one bank to another.
“Most of the public does not have complete information on prime lending rate,” said Mr. Hadad.
The letter sent by the KPPU on this issue was received by the OJK on 24 June 2014. In the letter, the KPPU addresses the current high interest rates for SMEs, resulting from the fact that banks consider disbursing loans to this sector as risky.
The KPPU further suggested to the OJK to address the matter through three approaches. As a start, the OJK could stipulate more measurable processes for determining the loan risk premiums by banks. Second, the OJK could establish an independent institution to determine loan risk premium levels. Third, the OJK in its capacity as a regulator could determine loan risk premium levels.
Commenting to the current situation, M. Nawir Messi, KPPU’s Chairman asserted that the high interest rates for SME has created unfair competition between banks. Based on these circumstances, the OJK and the KPPU agreed to enter into the MoU to strengthen supervision of business competition in the financial services sector.
“When it comes to the SME sector, only a few banks are competing to provide loans to this sector in several regions,” concluded Mr. Messi.
(hot/kc)