The repatriation of funds is expected to take place following the tax amnesty law and will ease bank liquidity.
OJK Executive Head for Banking Supervision Nelson Tampubolon said on Tuesday he was convinced that the second semester of 2016 would serve as a turning point in credit expansion after it dropped in the first semester.
"It still can grow by 13 percent," noted Nelson. He added, "I think it is not necessary to cast doubts over tax amnesty scheme and I do not need to predict the amount required," he added.
Bank Indonesia (BI/the central bank) has predicted that the funds expected to be repatriated from abroad would reach Rp560 trillion up by April 1, 2017. The Finance Ministry predicted a higher amount at Rp4,000 trillion, of which some Rp165 trillion will become state revenues.
Nelson said banks would be flooded with liquidity from the repatriation funds. The government has prepared banks as one of the parties which will manage the repatriated funds.
With abundant liquidity, banks should not be slow in extending credit, Nelson said.
Nelson said the real sector, boosted by the governments economic packages, is expected to be ready to absorb the funds. The readiness of business players in the real sector (manufacturing sector) to effect expansion will increase the banks credit.
It will also reduce the undisbursed loans lying with banks which have not yet been disbursed since the first semester.
Up to the first quarter of 2016, the banking credit grew by only 8.4 percent year on year, worth Rp4,027.2 trillion. The OJK statistics showed that the slowing down of credit took place with the capital credit extension.(*)
Editor: Heru Purwanto
Copyright © ANTARA 2016
