Eight tax haven countries are the source of foreign direct investment in Indonesia. The majority came from the British Virgin Islands, followed by Mauritius.
The role of rural banks will also be expanded by allowing them to participate in the recently launched branchless bank program. Under this program, rural banks will be able to act as bank agents.
The relentless sale of government bonds is fuelling concerns about even tighter bank liquidity. However, a government official has denied that banks will be left competing for funds.
Previously, BI Governor Agus Martowardojo said the cut in the bank reserve requirement will help to add the liquidity of banks. Now, BCA has predicted a liquidity increase of IDR 4 trillion.
Although high loan interest rates do nothing to help Indonesia compete globally, the country has what it takes to get back on its feet.
Slow economic growth and the plunge in commodity prices have smothered many companies, making it hard to pay their debts to banks. This has pushed up the banks" NPL ratios.
Since Bank Indonesia has lowered its interest rate and bank reserve requirement, state-owned banks BRI and Mandiri are planning to cut their rates. But banks have other ways of generating profits.
Bank Indonesia, OJK, and the Coordinating Economic Affairs Ministry will work together to achieve lower deposit and lending rates for government and private business.
Darmin explained that SOEs must not be allowed to threaten to move their money elsewhere if the bank does not offer them a higher rate of interest.
The government has allocated larger subsidy for KUR interest rate this year. And in order for the KUR program to be implemented well, the banks must be experienced enough in this matter.