Overseas interest rate still lower than domestic interest rate
— yulyanto • August 1st, 2007
The new data from Finance Minister Department said that since January till May 2007 the growth of mulfinance loan from overseas has been higher than mulfinance loan in domestic. This condition are happen because of overseas interest rate lower than domestic interest rate.
Currently, total multifinance’s loan from overseas are about Rp. 33 bilion or increase 3.12 percent if we compare with the month of December 2006 which only Rp. 32 bilion, while multifinance’s loan from domestic since last six month only growth around 0,90 percent (www.kontan-harian.com).
There are have some problems why our multifinance company did not want to borrow from domestic creditor? Firstly, they have an efficiency cost of interest with lower interest. Secondly, risk appetite from foreign creditor. Since economic crisis in Indonesia on 1997, the foreign creditor have no trust with our multifinance company, but start on 2005, they begin to giving back their trust to our multifinance company in here. Finaly, our bank institutional thinking that the multifinance business in here are still not good, so it will be take a risk to financing.
If our multifinance company go to overseas creditor to facility they loan, maybe they will meet the big trouble to paid the liabilities if our currency (IDR) go to depreciation again as per 1997’s crisis. Our multifinance company will be difficult and default to finish their liabilities to overseas creditor, so they are only waiting for bancrupty condition.
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