Indonesian banks tightening credit

The Asia-China Free Trade Agreement (ACFTA) will tighten competition within Indonesia’s already struggling textile industry and, according to a survey conducted by Bank Indonesia, will make securing bank loans difficult for domestic textile operations. The Indonesian government has called upon banks to lower lending rates to the textile sector for updating equipment and adapting to Chinese competition, and bankers indicate that government interest rate subsidies would make that more likely. Yanuar Rizky, president of the Indonesia Workers Association, states that the government must close the door long enough to give domestic producers time to adjust. “Shut the door first, deal with the problem, then we can go back to free trade.”