Banks still avoiding infrastructure projects, says Analyst

The banking sector is still reluctant to finance infrastructure projects due to the high risks associated with unclear land clearance regulations, a banking analyst says.

"If this situation persists, infrastructure development will never become a priority, [and will remain] dwarfed by the manufacturing sector, which is the main driver of borrowing," banking analyst Ryan Kiryanto said during a media gathering held by Bank BNI in Jakarta on Saturday.

Ryan called on the government to immediately address barriers to investment, citing conflicting land ownership regulations and an unclear land ownership database, so that the county could find players to participate in strategic infrastructure projects, such as constructing toll roads and power plants.

"The government's investment road map, which was recently introduced by the Investment Coordinating Board, stipulates that infrastructure is, of the three sectors, the one that must be prioritized this year, aside from food and energy," he said.

Ryan said the banking industry would see a total lending growth of 20 percent this year, down from 30 percent in 2008. (and)