Jakarta, CNBC Indonesia – Indonesia was hit by a money circulation drought even though Indonesia’s economic growth was able to stay at around 5%. This was expressed by President Joko Widodo (Jokowi) at the Bank Indonesia Annual Meeting (PTBI) at BI Head Office, Jakarta some time ago.
He argued that this phenomenon arose because of existence crowding out public funds. According to him, the Ministry of Finance (Kemenkeu) and BI issued too many instruments, namely Government Securities (SBN), Bank Indonesia Rupiah Securities (SRBI) and Bank Indonesia Foreign Currency Securities (SVBI).
“Don’t everyone buy too much, which I told BI and SBN earlier, even though that’s fine, it’s so that the real sector can look better than last year,” said Jokowi, quoted on Saturday (30/12/2023).
Data from Bank Indonesia (BI) shows that banking third party funds (DPK) growth was only 3.9% on an annual basis (year on year/yoy) as of October 2023, to IDR 7,982.3 trillion. This growth figure fell significantly compared to the previous month of 6.4% (yoy).
This growth experienced stagnation in November 2023. In that month, DPK was recorded at IDR 8,029.7 trillion, or grew by 3.8% (yoy). The growth in TPF was influenced by the growth of individual DPK which grew by 5.1% annually, while corporate DPK grew by 3.1% annually.
Governor of Bank Indonesia (BI) Perry Warjiyo said that the slowing growth in liquidity or third party funds (DPK) was due to the increasing number of investment instruments, so that people not only allocated their excess money to save in banks, but also invested in various investment instruments.
“Previously it was only in DPK, in savings at the bank, now you can buy SBN, retail and other investments, so indeed for the middle group, the decrease in DPK includes, among other things, a shift from previously being in DPK to purchasing government bonds,” said Perry when press conference at BI head office, Jakarta, quoted on Wednesday (27/12/2023).
BI Deputy Governor Juda Agung added that the weak condition of TPF growth was mainly due to the corporate customer group. Triggered by his income which also decreased due to weakening commodity prices.
“It’s not as high as last year because commodity prices have fallen slightly, so his income and exports are not as high as last year,” said Juda on the same occasion.
Juda admitted that the growth of customer deposits at banks was slowing, but he ensured that banking liquidity would not experience disruption, as reflected in the ratio of Liquid Assets to Third Party Funds (AL/DPK) remaining high, namely 26.04%.
“Still at 26%, this is much higher than the historical average of around 20% and also the threshold of 10%,” emphasized Juda.
On the other hand, he stated that the slowing growth in deposits would not disrupt credit distribution. This is because BI considers banking liquidity to be still very sufficient, especially for SBN.
The Financial Services Authority (OJK) assesses that bank liquidity in Indonesia is in good condition. Although the growth of third party funds (DPK) in the last two months has been relatively low.
Chairman of the OJK Board of Commissioners Mahendra Siregar said that there was indeed a slowdown in the placement of public funds in banks. One reason is that the Indonesian economy is currently in the process of normalization after the Covid-19 pandemic.
“In fact, the current figures are back to close to the same as pre-panedemic in terms of nominal amounts,” said Mahendra in the 2024 Economic Outlook, Friday (22/12/2023).
Apart from that, he suspects that the growth of TPF is slowing down because people have many choices of fund placement. “The instruments for placing funds are more varied, including the possibility of investing in SBN and the capital market,” said Mahendra.
Nevertheless, he assessed that the bank’s fundraising performance achievements until the end of 2023 were extraordinary. Seeing this phenomenon, Chairman of the LPS Board of Commissioners (DK) Purbaya Yudhi Sadewa did not remain silent. He said his party was conducting an investigation into where public funds went.
“If you look at the data that we can monitor, liquid assets and so on are still good. There are signals like that that there is some kind of drought, the lack of banking liquidity is a bit surprising to us. We are currently researching it more deeply, hopefully we know what the cause,” said Purbaya at the LPS Awards last week.
He explained that there are several possibilities related to the money drought, namely, the money is only ‘accumulating’ in large banks or in the government, in this case BI. This is what LPS is currently researching.
“This is classic in the banking world, in a slowing economic situation, money seems to have disappeared from the economic system, we say this is the cash of missing money in the economy. It’s not easy in different countries. That’s why we have to look more deeply,” concluded Purbaya.
[Gambas:Video CNBC]
(pgr/pgr)
2023-12-30 13:15:00
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