The banking sector is no longer reliable in helping to boost manufacturing industry during these current hard times, says the Industry Minister.

Industry Minister Fahmi Idris said the likely drop in the growth of bank lending this year, forecast at 15 percent, would affect the manufacturing sector significantly.

“Banks usually allocate their lending reserves conservatively. Such a situation indicates that the Indonesian banking sector no longer helping businesspeople to   build their businesses during this crisis situation,” he told reporters at his office.

Fahmi responded Tuesday to a recent report by Bank Indonesia (BI) which forecast that lending would only grow by about 15 per-cent this year, a drop to half of last year’s 29.4 percent increase in bank lending, due to the global financial crisis.

Therefore industrial players should “at least stay alive with their businesses,” during this difficult period, he said.

The fewer loans that industrial players could get would mean more barriers to their growth,

he added.

The ministry has forecast that the manufacturing sector will only grow by as little as 3.6 percent this year, a decline of 4.8 percent compared to 2008.

BI governor Boediono previously said BI had to revise its earlier forecast of lending growth from between 18 percent to 20 percent down to around 15 percent because of the global financial downturn.

“Ideally the rate (of lending growth) would be around 15 percent … a decline from 18 percent,” he said late Monday after a meeting with the House of Representatives’ Budget Committee members.

Local banks have also forecast that the growth in lending will only be about 15.6 percent this year.

Boediono said BI had taken into account the 2009 economic growth assumptions of around 4 percent to 5 percent, when releasing its latest forecast.

Finance Minister Sri Mulyani Indrawati said the country’s economic growth would still top 4.7 percent this year.

While banks may disburse fewer loans this year, a number of industry players reportedly have defaulted  on loans to state-owned Bank Mandiri according to a recent report.

Fahmi said the deputy coordinating minister for the economy Edy Putra Irawady had informed him about the current report.

He said only Bank Mandiri had reported this situation to the government. In the report were mentions of failed repayments in six industries in the manufacturing sector

“However, the information is still unclear. Did they fail to pay their installments, or their interest?” he asked. “How long has this been going on, three months, six months, or three years?”

“It is hard for me, who happens to understand financial and banking issues, to respond as the information is yet to be detailed,” he said.

Bank Mandiri corporate secretary Sukarijanto said he had not yet  learned about the report.

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