Indonesia is reportedly considering selling government stakes in banks while capping lending quotas, as part of its plan to channel more credit into the industry.
The move is also being seen as an indication of policy reform proposals brought by the incoming president Joko Widodo.
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Edi Prio Pambudi, an assistant deputy minister at the Coordinating Ministry for Economic Affairs in Indonesia was quoted by Bloomberg as saying: "Banking in Indonesia is still dominated by public banking not private banking.
"The cost of financing is very expensive and the country needs to reallocate the investment focus from primary commodities into manufacturing," Pambudi told the publication.
The government of Indonesia owns a 60% stake in PT Bank Mandiri (BMRI). Others that are state-owned include PT Bank Rakyat Indonesia, PT Bank Negara Indonesia and PT Bank Tabungan Negara.
Besides ensuring that the flow of money will go into more productive sectors, privatizing public banks and imposing lending quotas are among the measures, which are being considered, according to Pambudi.
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