Indonesian Banks has 12% Credit Interest Rate, while Malaysia has only 6%

The inefficiency in Indonesia Banking has resulted in expensive operational costs and higher interest rates. Among ASEAN countries, Indonesia's banking loan interest is very high.

Banks in Indonesia

According to the data from Bank of Indonesia (BI) quoted by detikFinance, Saturday (17/12), the mortgage interest rate of Indonesia banks has an average of 12.4%. This is very high compared to the credit interest in Malaysia (6.54%).

Even Thailand, the Philippines, and Korea have very low interest rate credit banking, i.e. respectively 7.25%, 5.71% and 5.69%.

Bank Indonesia noted that the highest differences between the central bank's benchmark interest rate and the real mortgage interest rate happened in Indonesia. Banks in Indonesia have much profit from the large difference between savings interest rate with credit interest rate. The savings interest rate in Indonesia is 6.39%, while the credit interest rates reached 12.4%.

As of the Bank of Indonesia data, the banking industry in Indonesia is lavish and inefficient resulted in high-interest credit. The ratio of operating expenses compared to operating income is high at 86.44% in October, while the average in ASEAN banks is only 40-60%.

The banking industry in Indonesia is also still "lazy" to give credit and prefer to invest in securities as it is safer.

Data shown that the ratio of bank credit to GDP in Indonesia is still low (just 29.1%). While in Malaysia it reached 114.9%, 131.1% in China, 116.7% in Thailand, 102.1% in Singapore and 100.8% in Korea.

Source: Analisa