The Indonesian Chamber of Commerce and Industry (Kadin) has again called on banks to cut their lending rate, saying reluctance to do so would mean the latter does not support the real sector.

“If banks don’t want to cut their lending rates, they don’t support the real sector. It will be useless if the central bank (BI) rate cut doesn’t make banks [follow suit],” Kadin chairman M.S. Hidayat said on Saturday.

Hidayat referred to the BI benchmark rate cut of 50 basis points to 7.75 percent last week, its lowest in five years, to cushion the impacts of the economic downturn.

Hidayat also said Kadin would discuss with BI ways to make banks cut lending rates quickly, due to the seriousness of the situation.

Under normal conditions, banks need two to three months to adjust to BI benchmark rate, he said.

Normally, the economy will run if BI keeps its rate below 8 percent, analyst Purbaya Yudhi Sadewa of Danareksa Research Institute said.

The government expects the economy to expand 4.5 percent this year, while Kadin says it would still be “good” if the economy grows 4 percent (maximum). Because exports have fallen, Hidayat said, the government must help businesses to stimulate the domestic market, whose demand is also slowly sliding.

Therefore, Kadin urged the government to optimize the domestic market, as well as reducing imports of nonessential consumer  goods.

Growth forecast of business sectors in 2009

Sectors                                            2008     2009

•  Agriculture, cattle breeding,

forestry and fisheries                     4.4%    2.6-2.9%

•    Mining                                         0.4%     0.9-1.3%

•    Manufacturing                               4.1%     2.0-2.6%

•   Electricity, gas and

clean water                                    11.4%     6.6-7.1%

•    Building                                          7.5%     5.4-6.2%

•    Trade, hotels and

restaurants                                       7.5%     5.3-6.0%

•    Transportation and

communication                                  17.7%    11.3-13.0%

•    Financial, company

service                                                8.0%     4.5-5.2%

•    Service                                               6.0%     4.6-5.6%

Source: Office of the Coordinating Minister

for the Economy

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