BANKS ORDERED TO CUT LENDING RATES

By Andi Abdussalam

Jakarta, May 7 (ANTTARA) - Amid calls by businesses and economic observers for significant cuts in banks' lending rates, the government ordered state-owned banks to lower the interest rates of their credits in order to stimulate the real sector.

        Acting Coordinating Minister for Economic Affairs Sri Mulyani Indrawati has said banks which have been operating efficiently should lower their lending rates because Bank Indonesia (BI/the central bank) has cut its benchmark rate. "We emphasize that state banks whose balance sheets are good and efficient should lower the interest rates of their credits," the minister said.

        The government's instruction on state banks came up amid calls by businesses that banks should cut their lending rates following BI's step on Tuesday to lower its benchmark rate by 0.25 basis points to 7.25 percent.

        Businesses grouped in the Indonesian Chamber of Commerce and Industry (Kadin) hope that the central bank's key rate cut would be followed by signification reduction in banks' lending rates in order to generate the performance of businesses in the real sector.

        "Business community hopes a significant cut scale in the banks' lending rate,"Kandin's chairman for Permanent Trade Committee, Bambang Soesatyo said.

        However, he has doubts that the BI rate cut would be able to drive down banks' lending rates in the country, owing to the fact that the central bank has aggressively cut its rate several times in the past four months but it has no significant impact on the lowering of lending rates.

        "We have doubts because a series of BI rate cuts failed to bring banks interest rates down," Bambang Soesatyo said.

        Therefore, economic observer Umar Juoro of the Center for Information and Development Studies (Cides) said that BI must urge banks to lower their lending rates after it had cut its key rate by 0.25 basis points to 7.25 percent.

        "BI must aggressively persuade banks so that they would cut their lending rates," Umar Juoro, said.

        BI's board of governors in its meeting on Tuesday decided to cut the central bank benchmark rate to 7.25 percent from the previous month's rate of 7.50 percent.

        The banking lending rates at present still range at 13-14 percent, which indicates a wide spread between them and the BI benchmark rate. The interest rate reference is at 13.79 percent with a difference spread of 600 basis points of the BI benchmark.

        For this purpose, the government should provide stimulation or guarantee for certain economic activities so that the chance for credit extension would become bigger. The government, for example, could take over the problem of land clearance for an infrastructure project so that banks would disburse their credits soon.

        "In this way, and with the purchasing power of the people still high, the development of the real sector would be boosted soon," he said.

        In the meantime, Minister for State Enterprises Sofyan Djalil said that State-owned banks cannot dictate their will to the market mechanism with regard to interest rates.

        "Let banks interest rates develop based on the market mechanism. State banks cannot dictate their will on interest rates to the market," the minister.

        However, he said that state banks would be able to adjust their rates to BI policies. They would cut their interest rates but it would depend on the macro or monetary policies adopted by Bank Indonesia.

        "Bank Indonesia has done its job well. If it cuts the interest rate of its certificates (SBI), banks' interest rates will also follow," he said.

        The government on Wednesday instructed state-owned banks which had efficient and good balance sheets to lower the interest rates of their credits. With BI cutting its benchmark by 0.25 basis points to 7.25 percent, banks which have been efficient should also lower the interest rate of their credits.

        Finance Minister Sri Mulyani said there was no difference between state banks and commercial banks. They were expected to lower their interest after the central bank cut its key rate on Tuesday.

        She said that if economic risks were not too bad, banks did not need to set too much reserves so that they would have enough room to lower the interest rate of their credits.

        After all, the BI's move to cut its key rate to 7.25 percent would boost funds into the productive sector. "What we hope with BI cutting its benchmark rate is its follow-up effect," the minister said.

        She said that if a bank had a healthy financial balance sheet as indicated in the decline in the interest rate of its deposit, it would have a room to adjust its cost of lending or the interest rate of its credits.***2*** (T.A014/A/HAJM/19:10/a014) (T.A014/A/A014/A/A014) 07-05-2009 19:06:01

BANKS NOT LIKELY TO CUT LENDING RATE SOON

By Andi Abdussalam

Jakarta, May 5 (ANTARA) - Banks are unlikely to lower their lending rates in the near future despite the fact that Bank Indonesia (BI) once again cut its benchmark rate by 0.25 basis points to 7.25 percent on Tuesday, another step which saw the central bank's aggressive steps which have since January cut 200 basis points or 2.0 percent of its key rate.

        The aggressive steps by BI are expected to help drive down banking credits in order to stimulate development of the real sector amid the economic downturn. However, banks are unlikely to lower their lending rates in the near future.

        "Banks will lower their interest rates on credits or savings only if economic growth and investment in the country have improved," economic analyst of state-owned bank Bank BIN Muhammad Alfatih said.

        Alfatih made remarks in response to a call on Tuesday asking the government to exert pressure on banks to lower their interest rates following the BI's step in cutting its benchmark rate. Secretary general of the Islamic Economists Association (IAEI), Agustianto urged the government to force banks to lower their lending rates.

        "Banks should not enjoy the BI rate cut only while refusing to lower their interest rates on credits," he said. His organization supported the BI's step in lowering its benchmark rate because it would help to move the real sector where many small people were doing business.

        The IAEI even hoped BI would continue to lower its rate to six or five percent. He said the BI's step in cutting its key interest rate had not yet been effective as it was not followed by banks which were still imposing high interest rates.

        If banks are ready to lower their lending rates, the real sector could be developed. "The government is expected to force banks to do so," he said.

        However, monetary analyst John Tafbu Ritonga, who is also dean of North Sumatra University's School of Economics, said that the government could not force banks because banks had to cover the costs they had incurred previously.

        Although the BI Rate has dropped, third party funds deposited at banks now were collected when the BI benchmark rate was still high.

        Based on this fact, banks should regain the costs they had incurred to pay in interest on their clients' deposits.

        But a call by the government on banks to lower their interest rates could be fulfilled if there was an advantageous solution such as the readiness of the government to bear the risks of micro-business credits and part of the interest rates of certain business credits.

        "If there is such a solution the government can urge banks to lower their interest rates," he said.

        Basically, banks support lower banks' lending rates. Retail Banking Director of Bank Mega, Kostaman Thayib said that lower bank lending rates would help the people, businessmen and the banks themselves.

        "This is a good step as it will reduce non-performing loans (NPL) and benefit the banking sector," he said.

        Therefore, Muhammad Alfatih said a number of banks would follow the BI to cut their interest rates, if investment and economic growth improved.

        "Banks still see there are investment risks so that they have yet to cut their interest rates," he said.

        He said that fears of economic growth which was not yet stable could add risks to banks' business. After all, there were a number of conventional banks whose conditions were not yet conducive to lowering interest rates.

        Besides, he said, the BI Rate cut by 0.25 basis points would generate stocks market and bonds trade. "This condition would provide strength for the stock market. This would invite more foreign funds into the stock market," he said

        According to economic analyst Ryan Kiryantono, the decision on Tuesday of BI to cut its BI Rate by 0.25 basis points will give a positive sentiment to the market.

        "The BI benchmark rate reduction will give a positive sentiment to the stock exchange and money market because it is predicted it would lead to the lowering of banks' lending interest rates as expected by the business world," he said.

        The interest rate cut is in line with the present improving macro-economic conditions where the stocks market was gaining strength while the rupiah currency was appreciating to below Rp10,500 per US dollar.

        Inflationary pressure is also slackening where in April the country experienced a deflation of 0.31 percent and its foreign exchange reserves have also increased by 1.85 billion dollars to 56.67 billion dollars.

        Factors that affected inflation have also reduced their pressures, such as the low world crude price at 48 dollars per barrel, the grand harvest and the decline in imports. All this has helped the lowering of the BI benchmark rate.

        "If in months ahead inflation remains low, BI will have a big chance to lower its rate to seven percent later this year," he said.

        The board of governors of Bank Indonesia decided on Tuesday to lower its benchmark rate (BI Rate) by 25 basis points to 7.25 percent. Since December 2008, the BI rate has been cut by 225 basis points to 7.25 percent. ***2*** (T.A014/A/HAJM/20:10/A/H-YH)

        (T.A014/A/A014/A/H-YH) 05-05-2009 21:01:29

POLITICAL ELITES ABANDON FUNDAMENTAL VALUES

By Andi Abdussalam

Jakarta, May 4 (ANTARA) - Indonesian politics today is lacking in fundamental values as most political party leaders are adopting pragmatism to grab power for short-term interests, political analysts say.

        Internal rifts within political parties also happen not because of strategic matters but because of bickering over how to coalesce and to nominate a cadre for a presidential or even a vice presidential position.

        "Therefore, the political elites now produce mere rhetoric instead of strategic ideas and thoughts, indicating how they have put aside fundamental values," Rocky Gerung of the University of Indonesia (UI) said.

        It turns out that the number of genuine political players in the country is small as what the political elites are concerned about today in forming coalitions -- a phenomenon basically reflecting pragmatism where fundamental values have been forgotten, Roceky Gerung said.

        The almost one-month long activities of political party leaders in building what they called political communications has basically given birth to two main coalitions.

        The two coalitions are that between the Democratic Party and the National Mandate Party (PAN) and the grand coalition in parliament sponsored by the Indonesian Democratic Party-Struggle (PDIP) and the Golkar Party.

        Widely expected to be the winner of the upcoming presidential race in July 8, 2009, the Democratic Party with incumbent President Susilo Bambang Yudhohono as its presidential hopeful, had won about 20 percent of the recent legislative elections.

        Even now, at least three political parties are vying for the vice presidential candidate post to accompany Yudhoyono as his running mate.

        Golkar, which initially eyed the vice presidential post with Yudhoyono, officially declared its chairman Jusuf Kalla as its presidential hopeful. Kalla picked Wiranto of the People's Conscience Party (Hanura) as his running mate.

        The Democratic Party has nominated Yudhoyono as its presidential hopeful and will announce its vice presidential candidate later. PDIP is also almost certain to nominate its own presidential ticket.

        Thus, there would be three presidential/vice presidential pair candidates to contest the July 8, 2009 presidential race. However, observers have doubts about the solidness of the grand coalition.

        Political analyst Nehemian Lawalata said he had doubts over the seriousness of parties in the grand coalition in nominating their presidential and vice presidential candidates.

        "I am afraid that they will withdraw in the runup to the registration of presidential pairs," he said.

        In the meantime, Arie Sujito of the University of Gajah Mada (UGM) said the political elites had been very busy engaging in political transactions after seeing the results of the quick counts by survey institutions.

        "Political party elites, after seeing the results of the quick counts looked as if were losing their sense and were busy trying to make political transactions. They forgot what the people actually wanted from them," he said.

        He said the political party elites should first study what was desired by the people before they decided their directions and steps.

        "The steps of the political party elites are often not in line with political realities," Arie Sujito said.

        He said the National Mandate Party (PAN) which decided to coalesce with the Democratic Party in its meeting recently and nominated its cadre as vice presidential candidate was influenced by the results of the quick counts, where the Democratic Party seemed to be victorious.

        "When it saw the results of the quick counts which were not favorable for PAN, it decided to join forces with the likely winner," he added.

        After all, PAN chairman Sutrisno Bachir had earlier shown his intention to coalesce with PDIP while its senior cadre Amin Rais desired to coalesce with the Democratic Party.

        "In the runup to declaration of the grand coalition in parliament, Sutrisno Bachir, who had the ambition to become the presidential candidate of the coalition, turned out not to be reckoned," he said.

        Now that PAN has joined a coalition with the Democratic Party, it could invite a big question among the people because so far Amien Rais was known to be a critic of Yudhoyono's policies.

        "The people can now have an adverse opinion about Amien Rais who used to be critical of Yudhoyono," Sujito said.

        In the meantime, the solidness of the grand coalition whose declaration last week was read by Greater Indonesia Movement Party (Gerindra) chairman Prabowo Subiyanto, is also doubted.

        "There is no guarantee that the grand coalition would remain solid," Widhya Bagja, a socio-political observer, said.

        The declaration of the grand coalition among others contained the commitment of all members to maintaining the integrity of the Unitary State of Indonesia and maintain the country's economic sovereignty for the welfare of the people.

        It also included a commitment to developing political party institutions as a pillar of democracy. The grand coalition in parliament consisted of Golkar, PDIP, Gerindra, Hanura, National Ulemas Awakening Party (PKNU), Prosperous Peace Party (PDS), Labor Party, the Indonesian United Ummah Party (PPNUI) and Reform Stars Party (BPR). The United Development Party (PPP) initially included in the grand coalition but later decided to quick.

        Political parties which have confirmed to coalesce with the Democratic Party of Yudhoyono are the Prosperous Justice Party (PKS), the National Awakening Party (PKB) and PAN. The PPP is widely expected to Yudhoyono.

        However, Tommy Susu of the Widya Mandira Catholic University in Kupang, said that the maneuvers of political elites in building strength in the parliament and in winning presidential and vice presidential candidate positions gave specific spectrum to the development of democracy in Indonesia.

        "The political conditions built by political elites are still within the healthy and ethical corridor of democracy," he said. ***1*** (T.A014/A/HAJM/A/E002) (T.A014/A/A014/A/E002) 05-05-2009 00:25:37

POLITICAL ELITES ABONDAN FUNDAMENTAL VALUES

By Andi Abdussalam

Jakarta, May 4 (ANTARA) - Indonesian politics today is lacking in fundamental values as most political party leaders are adopting pragmatism to grab power for short-term interests, political analysts say.

        Internal rifts within political parties also happen not because of strategic matters but because of bickering over how to coalesce and to nominate a cadre for a presidential or even a vice presidential position.

        "Therefore, the political elites now produce mere rhetoric instead of strategic ideas and thoughts, indicating how they have put aside fundamental values," Rocky Gerung of the University of Indonesia (UI) said.

        It turns out that the number of genuine political players in the country is small as what the political elites are concerned about today in forming coalitions -- a phenomenon basically reflecting pragmatism where fundamental values have been forgotten, Roceky Gerung said.

        The almost one-month long activities of political party leaders in building what they called political communications has basically given birth to two main coalitions.

        The two coalitions are that between the Democratic Party and the National Mandate Party (PAN) and the grand coalition in parliament sponsored by the Indonesian Democratic Party-Struggle (PDIP) and the Golkar Party.

        Widely expected to be the winner of the upcoming presidential race in July 8, 2009, the Democratic Party with incumbent President Susilo Bambang Yudhohono as its presidential hopeful, had won about 20 percent of the recent legislative elections.

        Even now, at least three political parties are vying for the vice presidential candidate post to accompany Yudhoyono as his running mate.

        Golkar, which initially eyed the vice presidential post with Yudhoyono, officially declared its chairman Jusuf Kalla as its presidential hopeful. Kalla picked Wiranto of the People's Conscience Party (Hanura) as his running mate.

        The Democratic Party has nominated Yudhoyono as its presidential hopeful and will announce its vice presidential candidate later. PDIP is also almost certain to nominate its own presidential ticket.

        Thus, there would be three presidential/vice presidential pair candidates to contest the July 8, 2009 presidential race. However, observers have doubts about the solidness of the grand coalition.

        Political analyst Nehemian Lawalata said he had doubts over the seriousness of parties in the grand coalition in nominating their presidential and vice presidential candidates.

        "I am afraid that they will withdraw in the runup to the registration of presidential pairs," he said.

        In the meantime, Arie Sujito of the University of Gajah Mada (UGM) said the political elites had been very busy engaging in political transactions after seeing the results of the quick counts by survey institutions.

        "Political party elites, after seeing the results of the quick counts looked as if were losing their sense and were busy trying to make political transactions. They forgot what the people actually wanted from them," he said.

        He said the political party elites should first study what was desired by the people before they decided their directions and steps.

        "The steps of the political party elites are often not in line with political realities," Arie Sujito said.

        He said the National Mandate Party (PAN) which decided to coalesce with the Democratic Party in its meeting recently and nominated its cadre as vice presidential candidate was influenced by the results of the quick counts, where the Democratic Party seemed to be victorious.

        "When it saw the results of the quick counts which were not favorable for PAN, it decided to join forces with the likely winner," he added.

        After all, PAN chairman Sutrisno Bachir had earlier shown his intention to coalesce with PDIP while its senior cadre Amin Rais desired to coalesce with the Democratic Party.

        "In the runup to declaration of the grand coalition in parliament, Sutrisno Bachir, who had the ambition to become the presidential candidate of the coalition, turned out not to be reckoned," he said.

        Now that PAN has joined a coalition with the Democratic Party, it could invite a big question among the people because so far Amien Rais was known to be a critic of Yudhoyono's policies.

        "The people can now have an adverse opinion about Amien Rais who used to be critical of Yudhoyono," Sujito said.

        In the meantime, the solidness of the grand coalition whose declaration last week was read by Greater Indonesia Movement Party (Gerindra) chairman Prabowo Subiyanto, is also doubted.

        "There is no guarantee that the grand coalition would remain solid," Widhya Bagja, a socio-political observer, said.

        The declaration of the grand coalition among others contained the commitment of all members to maintaining the integrity of the Unitary State of Indonesia and maintain the country's economic sovereignty for the welfare of the people.

        It also included a commitment to developing political party institutions as a pillar of democracy. The grand coalition in parliament consisted of Golkar, PDIP, Gerindra, Hanura, National Ulemas Awakening Party (PKNU), Prosperous Peace Party (PDS), Labor Party, the Indonesian United Ummah Party (PPNUI) and Reform Stars Party (BPR). The United Development Party (PPP) initially included in the grand coalition but later decided to quick.

        Political parties which have confirmed to coalesce with the Democratic Party of Yudhoyono are the Prosperous Justice Party (PKS), the National Awakening Party (PKB) and PAN. The PPP is widely expected to Yudhoyono.

        However, Tommy Susu of the Widya Mandira Catholic University in Kupang, said that the maneuvers of political elites in building strength in the parliament and in winning presidential and vice presidential candidate positions gave specific spectrum to the development of democracy in Indonesia.

        "The political conditions built by political elites are still within the healthy and ethical corridor of democracy," he said. ***1*** (T.A014/A/HAJM/A/E002) (T.A014/A/A014/A/E002) 05-05-2009 00:25:37

GOLKAR PLAGUED BY INTERNAL RIFTS OVER COALITION

By Andi Abdussalam

Jakarta, May 3 (ANTARA) - The Golkar Party is now facing internal rifts between its central executive board and regional branches over a stand the former New Order political machine should take with regard to coalition and presidential/vice presidential candidacy for the upcoming July 8, 2009 presidential elections.

        Before last April 9 legislative elections, Golkar General Chairman Jusuf Kalla (JK) faced pressures from regional branches that Golkar should nominate its own presidential hopeful.

        Now, he is facing another round of pressures from district branches that it should coalesce with and offer its vice presidential candidate to the Democratic Party.

        The Democratic Party, of which incumbent President Susilo Bambang Yudhoyono (SBY) is chief patron, is the winner with 20 percent of the votes of the April 9 legislative elections based on exit polls organized by a number of survey institutions. Golkar, winner of the 2004 legislative elections, finished third with about 14 percent of the votes.

        Incumbent Vice President Jusuf Kalla, who bowed to regional branches' pressures and announced his readiness during the recent election campaigns to run for presidency, officially declared on Friday Wiranto of the People's Conscience Party (Hanura) as his running mate in the next presidential race.

        Kalla, who long before the election campaigns, has expressed his willingness to maintain his duet with Yudhoyono, was given last week the mandate by Golkar special national leadership meeting to build political communications with other political parties to form a coalition and decide a presidential/vice presidential candidate pair.

        However, the Golkar chairman is now facing internal rifts between those supporting his presidential bid and those pressing for coalescing again with the Democratic Party.

        "We have to admit that there are factions within Golkar which are unsatisfied with the declaration of JK-Wiranto presidential candidate pair. This is a kind of 'star wars' within the party elite over an attempt to abort the decision," Zainal Bintang, founder of the 'JK 4 President' said Saturday night.

        Zaenal Bintang, a leader of the MKGR, a mess organization affiliated to Golkar, said that Golkar had to work hard to overcome the internal rifts and offset the impact of the the 'star wars.'

        He said that dissatisfactions aroused not only within Golkar but also outside the party, namely those who wanted to take advantage of Golkar as a 'riding horse'. Bintang, who is also a compartment chairman of Golkar said that Golkar's decision to declare its presidential and vice presidential pair needed to be safeguarded.

        "Kalla has to conduct a road-show to regions immediately to unite the heart and thoughts of Golkar's cadres in all layers. His visit to potential cadres in the regions is the best way to build strengths," Bintang said.

        He said that Kalla should not be careless because cadres who were disappointed were strong. "They continue to build consolidation and strength and try to capitalize on Kalla's weaknesses," Bintang Added.

        Irsyad Sudiro, a senior cadre of Golkar, also aired the same voice. He said that there were cadres who were unsatisfied with the declaration of Kalla and Wiranto as Golkar's presidential and vice presidential candidates for the upcoming presidential contest.

        "Not all aspirations in the district level want Golkar to nominate its own presidential hopeful," Sudiro said. He said that with winning only about 14 percent of the votes in the April 9 legislative elections, Golkar had no enough chance to win the presidential elections. Therefore, some Golkar cadres want that Golkar should coalesce with the Democratic Party and continue its SBY-JK duet for the second term.

        Sudiro, who is also a chairman of the House of Board of Ethics, said that he himself was one of the cadres who wanted Golkar to maintain its coalition with the Democratic Party because a coalition with it had a big chance to win the presidential elections.

        "For sure, not all elements within Golkar are willing to accept the JK-Wiranto duet but the JK-SBY instead," Sudiro said.

        However, in get-together with the leaders of Golkar Party's district-level branches in Makassar, South Sulawesi on Saturday, Kalla revealed why he decided to part the Democratic Party and broke with Yudhoyono.

        "As many as three times, I told President Yudhoyono that Golkar still wanted to remain a partner, but every time the answer was yes, we will be together, no clear answer. If it's yes, then say yes. If it's no, then say no. So it meant, well, let us just part. Golkar is not begging for any position," Kalla said.

        He said that Yudhoyono even set certain conditions. "I have been serving as his vice president, still he set conditions. This was just a way to say no, meaning there was no sincerity. We, Golkar, felt our self-respect was compromised," Kalla said.

        Because Golkar felt it was being belittled, Golkar eventually decided to separate from the Democratic Party, he said.

        He reminded that when a cadre of the Democratic Party sometime in the past said Golkar would only be able to win 2.5 percent of the legislative elections, Golkar felt it was being belittled.

        Therefore, all provincial branches of Golkar at that time asked him to move forward as a presidential hopeful. "Because Golkar felt its dignity was being offended, I could not reject pressures from provincial branches who wanted to nominate me. If I reject it, it will cause divisions within Golkar," he said.

        Now however, Kalla is facing many obstacles posed by the people within as well as outside the Golkar Party in his bid to run for president.

        "Certain elements in the party claiming to represent Golkar's 320 district branches are against my bid. But when I checked, they only proved to represent themselves, somebody had paid them. I ordered the police to arrest those people who had misused the party's name," Kalla said.***1*** (T.A014/A/H-NG/a014)

BANKS' LENDING ACTIVITY STILL LOW

By Andi Abdussalam

Jakarta, May 2 (ANTARA) - Banks' lending activity in the country is still low because banks are still reluctant to aggressively provide credits for fear of non-performing loans while demand for credits is also declining due to the impact of the world economic crisis which also affects Indonesia.

        "A recent survey on banks indicated weak credit demand and lack of interest of banks to provide credits," director of banking arrangement and research affairs of Bank Indonesia (BI/the central bank), Halim Alamsyah, said early this week.

        Demand for credits is weakening as the global economic crisis has weakened the country's economy as reflected in the slowing down of Indonesia's export-import activities and low people's purchasing power.

        In the meantime, banks are being discouraged to aggressively provide credits in face of increasing credit risks and become more prudent in channeling credits amid the economic crisis.

        As a consequence of low demand for loans and credit contraction, third party funds continue to accumulate and grow at banks in the last several months. This is also due to the fact that deposit interest rates are still attractive to depositors and their confidence in banks is relatively high.

        "In a condition like this where uncertainties are high, banks prefer to maintain their financial soundness," Alamsyah said. He hoped that banking business would return to normal in the second semester of this year.

        In an effort to reinvigorate the banking business, banks have to cut their lending rates and lower deposit interest. In this case, it is expected that state-owned banks would pioneer the lowering of their interest rate where private banks would follow suit.

        However, State Enterprises Minister Sofyan Djalil said his ministry could not force state-owned banks to lower their interest rates because it was a matter in which each bank could have its own considerations.

        "That's the banks' affair, and if they are forced (to cut interest rates), state-owned banks will lose their competitiveness," Djalil said recently. Banks so far have cut their interest rates only slightly following the decision of Bank Indonesia (BI) to lower its benchmark (BI Rate) further.

        The central bank since January this year has cut a total of 175 basis points or 1.75 percent of its benchmark rate to 7.5 percent. However, responses of other banks are still slow. Since January banks have only cut about 0.05 percent of their interest rates.

        After all, banks are also unable to lower their rates because depositors, particularly the big ones, still ask for high interest, which if not fulfilled would remove their funds to other interesting places.

        In order to help lower lending rates, businessmen saving funds at banks should not ask for a deposit interest rate above the 7.75 percent guaranteed by the government.

        "Businessmen would always ask for a low interest rate when they borrow money and a high one when they save it. Please you conglomerates should not ask for high saving interest rates so that lending rate could be lowered," president director of state-owned Bank BRI Sudaryanto Sudargo said.

        He said that demand for high saving interest by big-time businessmen was the main cause why the lending rates so far were going down very slowly, in spite of the fact that Bank Indonesia BI had aggressively lowered its benchmark rate. This caused fund costs to remain high.

        Competition among banks to maintain high interest rates is also fueled by the issuance by the government of state debentures (SUN) and Islamic bonds (Sukuk) which carry an interest rate of 10-12 percent. This created difficulties for banks to lower their deposit interest rates.

        It is expected, however that BI would continue to cut its benchmark which analysts predict would reach 6.5 percent at the end of this year. Moreover, the country has undergone deflation. The Central Board of Statistics (BPS) announced on Friday that the country had experienced a 0.13 percent deflation in April 2009.

        In this regard, state-owned Bank BNI will soon respond to the positive trend by planning to cut its deposit interest rates in the first semester of this year.

        "We hope this year that our net interest margin (NIM) would be lower than that of last year, namely from 6.3 percent to a range of 5.5-6.0 percent," Bank BNI President Director Gatot Suwondo said on the sidelines of the annual meeting of the Asian Development Bank (ADB) in Bali on Saturday.

        He said that BI rate could reach 7.0 percent up to the end of the year and this would drive down banks interest rates. In the meantime, Bank BNI's Treasury and International Affairs Director, Bien Subiantoro said BNI had plans to cut the interest rate of consumer credits first from 16 percent to 14 percent before it cut its corporate credits from 13 percent to 11 percent.

        "We hope the interest rates would have been lowered in the first semester of this year," he said.***1*** (T.A014/A/HAJM/14:15/a/f001) (T.A014/A/A014/A/F001) 02-05-2009 14:30:56

GOLKAR DECLARES KALLA-WIRANTO AS ITS PRESIDENTIAL PAIR

By Andi Abdussalam

Jakarta, May 1 (ANTARA) - The Golkar Party and the People's Conscience Party (Hanura) moved faster on Friday by officially declaring their leaders presidential and vice presidential candidates for the upcoming presidential race on July 8, 2009.

        With the declaration, the Golkar and Hanura parties have officially nominated Jusuf Kalla (JK) and Wiranto as a presidential and vice presidential ticket for the presidential polls.

        The JK-Wiranto ticket is the first presidential pair to be declared. Susilo Bambang Yudhoyono who is Democratic Party (PD)'s presidential hopeful and Megawati Soekarnoputri, presidential candidate of the Indonesian Democratic Party of Struggle (PDIP), have yet to make up their mind on their respective running mates.

        With the declaration of JK and Wiranto as a presidential and vice presidential pair, it is most likely that there would be three presidential pairs who would compete in the next presidential race.

        Besides the JK-Wiranto pair, there are two other presidential hopefuls who have not yet picked a running mate. Susilo Bambang Yudhoyono will surely be the presidential hopeful of the coalition formed by the Democratic Party. The party decided to nominate Yudhoyono in its National Meeting on April 26, 2009. But Yudhoyono has yet to pick a name for his running mate. The media still speculated on names who will accompany Yudhoyono as his running mate.

        The other presidential hopeful who is certain to step forward for the presidential race is the PDIP chairwoman. But Megawati has not yet chosen her running mate, though some speculated that she would likely pick Prabowo Subianto of the Greater Indonesia Movement Party (Gerindra).

        Following the decision of Golkar to announce its presidential and vice presidential candidates, the Democratic Party expressed its appreciation and congratulations.

        Previously, Golkar and the Democratic Party had built political communications to form a coalition. But Golkar decided to terminate the talks due to failure to achieve an accord on how to build the coalition.

        The exit of Golkar from a possible coalition with the Democratic Party raised speculations that Golkar would face difficulties in finding a partner of coalition especially with PDIP. Golkar in its special national leadership meeting had decided to nominate Kalla as its presidential candidate. In the meantime, PDIP has also nominated Megawati as its presidential hopeful.

        It turns out however that Golkar is even able to come up as the first party to announce its presidential ticket.

        On the declaration of JK-Wiranto as a presidential candidate pair, the Democratic Party expressed its appreciation. "If Kalla and Wiranto have decided to pair up, the Democratic Party will appreciate and at the same time congratulate them," PD Chairman for Human Resources Development Andi Mallarangeng said.

        He said that the Democratic Party hoped that the upcoming presidential contest would run ethically. "If it is true that JK and Wiranto have decided to pair up then we will congratulate them and hope that the presidential contest would run fairly," Andi, who is also a presidential spokesman said.

        Yudhoyono and Kalla are respectively incumbent president and vice president but with Kalla's decision to run for president in the next polls, they will contest with each other.

        However both leaders have agreed to compete fairly and ethically based on the rules of the game.

        Other Democratic Party associate chairman Anas Urbaningrum said his party warmly welcome the declaration of Kalla and Wiranto as presidential and vice presidential candidates.

        "This is a denial of fears that there would only be a single presidential and vice presidential candidates," Urbaningrum said a moment after Kalla and Wiranto declared their decision to pair up in the coming presidential contest. Recently, PDIP had threatened to boycott the presidential elections due to alleged fraud by the General Elections Commission (KPU) in the recent legislative elections.

        Urbaningrum congratulated the newly declared the JK-Wiranto pair. "Congratulations to Kalla and Wiranto who are the first to be declared as a presidential pair," Urbaningrum said expressing his hope that all parties would create a democratic and respectable competition climate.

        The Democratic Party itself is still concentrating on building a coalition.

        "The National Awakening Party (PKB) has agreed to join us while the Prosperous Justice Party (PKS) is still under a finalization process. We are optimistic that the National Mandate Party (PAN) and the United Development Party (PPP) will also join the coalition," Urbaningrum said.

        He hoped that PAN would soon confirm its readiness while PPP would follow later. "On the vice presidential candidate, the matter is left to Yudhoyono as the presidential hopeful to decide. We do not insist on Yudhoyono to announce it soon. So, there is no need to be in a hurry," he said.

        What is important, according to Urbaningrum, is that the Democratic Party would not be late in registering its presidential and vice presidential pair at the General Elections Commission (KPU). ***1*** (T.A014/A/H-NG/a014)

        (T.A014/A/A014/A/A014) 02-05-2009 00:53:42