Bank Challenges in Undertaking Downstream Financing

The National Banks Association ( “ Perbanas ”) shows support for the Government in financing downstream projects. However, the Head of the Economic and Banking Study Development Division of Perbanas, Aviliani, revealed a number of challenges that banks, both state-owned and private, will face in financing downstreaming.

"Basically, Indonesian banking supports the government's policy program. So, any downstream project, of course, we will fund. But of course, if I may ask, if I may, a project that is indeed feasible and has the ability to pay," said Aviliani when talking to Hukumonline.

This is not without reason, according to Aviliani there are a number of downstream projects that have negative equity values , so they are risky for the Bank. Given that the Bank will continue to implement prudential principles in providing financing.

"Banking actually follows the business . However, each bank has a different risk appetite . So if the equity is minus, of course we don't dare because it's too risky if we put money there," he concluded.