"I am optimistic the NPL would improve. In fact the NPL the banks have now is a carry over from 2015," Muliaman said on the sidelines of the Risk & Governance Summit (RGS) 2016 with theme of Ethical Governance: The Soul of Sustainability here on Tuesday.
He said NPLs recorded by banks in earlier years were high with the mining sector badly hit by commodity price fall. The mining sectors was one of the largest recipients of bank credits especially in the hey day of coal mining industry in earlier years.
In 2016, banks are relatively more prudent and selective in extending credits resulting in a slower growth. Banks have to set aside large provision for risk of bad debts.
"Therefore, if we see the trend, credit expansion is declining, but the banking condition is healthier. Slimmer but healthy as credit risks are safely covered," Muliaman said.
NPL by September 2016 was 3.1 percent or lower than 3.22 percent a month earlier and 3.18 percent in July, he said.
He said the bank fundamental is quite good especially in the ability to weather the many risks as reflected in the high capital adequacy.
He said he hoped the domestic economy would grow further after the government and OJK have taken a number of initiatives to boost the economic development.
"I think it would be good if we could bring down the NPL to 3 percent," he said.
In Manado, economist Joshua Pardede said he still sees potential turbulence to hamper global economic recovery in 2017.
The election of Donald Trump as a new U.S. president would still have its negative effect on the global economic condition in 2017, Joshua said .
"The impact is slowing credit expansion despite the cut in Bank Indonesia benchmark interest rate," he said in the North Sulawesi capital on Tuesday.
He said the election of Trump has weakened the countrys currency rupiah.
He said the global economy still is partly determined by the worlds largest economy, adding the United States is the main export destination for many countries.
However, he said he believed Trump would succeed in improving the U.S. domestic economy .
Improved U.S. economy is expected to have positive impact on the economy of countries having good trade relations with that economic super power, he said.(*)