BI to issue new regulation on foreign debt

JAKARTA. Indonesia's private foreign debts continue to increase, forcing Bank Indonesia (BI) to issue a new regulation to better manage the debts.

"We will have a new regulation to promote care in managing foreign debts," BI Governor Agus Martowardojo said in Jakarta on Thursday as quoted by kontan.co.id.

He refused to elaborate on the detail of the regulation, but said the regulation would not be in the form of a debt equity ratio (DER).

The Finance Ministry is developing the DER regulation and it plans to create a different debt ratio from one sector to another. The finance sector is expected to see the highest debt ratio because of the sophisticated characteristics of the sector.

According to recent central bank data, rental businesses and services have become the major contributors to foreign debt.

In June 2014 alone, foreign debt in this sector reached US$126.59 billion, increasing slightly by 0.03 percent compared to $126.56 billion in the previous month.

Meanwhile, the foreign debt ratio in the country throughout the second quarter of the year was 33.86 percent of gross domestic product (GDP). The figure was bigger than the GDP of 32.33 percent recorded in the first quarter.

In total, the foreign debt ratio in private companies in June this year reached $153.22 billion, a 0.76 percent rise from $152.07 million the previous month. On the other hand, the government's foreign debt decreased by 0.78 percent to $122.19 billion in June 2014.