Let the Cabinet be fat, as long as it is healthy: Credit Whitening “Stalled”, No New Moral Hazard

By Infobank Media Group Editor-in-Chief Eko B. Supriyanto

CABINET is “obese” or fat. That’s what some observers call the Red and White Cabinet. That’s because the number of cabinet members in the Prabowo-Gibran administration, consisting of ministers, deputy ministers, agency heads, deputy agency heads, and ministerial-level officials, reaches around 109 people. However, before they had even started working – they had a retreat at Hambalang and a military-style debriefing at the Military Academy (Akmil), Magelang – President Prabowo, through Hashim S. Djojohadikusumo, his younger brother, had already given good news about the settlement of bad debts for 6 million customers.

Many in the business community hope that the Prabowo-Gibran government with a fat cabinet, with various policies implemented, can create jobs, create quality economic growth, reduce poverty, and increase people’s purchasing power. In addition, it can improve food security in this fertile country of Indonesia. It’s okay to have a fat cabinet, as long as it’s healthy. Do not let the fat cabinet, which has good intentions, have several posts that do not fit. The issue of coordination is important.

The government’s job is to make policies, not personify them by only distributing T-shirts, rice, milk, and books. Blusukan is just an image. Not understanding the problem. It is better to make policies that have more visible benefits for the welfare of the community rather than blusuk here and blusuk there. The imaging style with blusukan should be stopped immediately, because we know the results have not been able to increase quality economic growth by 7 percent over the past 10 years.

Back to the issue of writing off bad debts, expressed by Hashim. That is a good thing. The article on state losses on bad debt write-offs is no longer a “ghost” for state-owned bankers. So far, despite PP 33/2006, which confirms that BUMN receivables are not classified as state receivables, bankers still dare not do it.

The government has reportedly finalized a draft government regulation (PP) on the elimination of bad debts and write-offs. This refers to Law Number 4 of 2023 concerning Development and Strengthening of the Financial Sector (P2SK). Articles 250 and 251 state that bad debts of state-owned banks and/or non-bank financial institutions to MSMEs can be written off and written off to support the smooth provision of access to financing to MSMEs.

For decades, the rubber article on harming the state has been an ever-present “ghost”. The Supreme Audit Agency (BPK) is the scariest “ghost” because it is equipped with Law No. 17/2003 on State Finance which still mentions write-offs as detrimental to the state.

Furthermore, Government Regulation in Lieu of Law (Perppu) Number 49 of 1960 concerning State Receivables. So, even though there is PP 33/2006, it is still barren. The position of PP is still lower than the law. Moreover, the rubber articles still mention the elimination of state receivables (credit) is a state loss, or corruption. Naturally, state-owned bankers are still afraid.

According to the Infobank Institute, the write-off policy for state-owned banks is based on at least two important things. One, the number of ultra-micro, micro, and small debtors who have “stalled” is increasing every year. Two, cleaning up these “stalled” debtors can revive the debtor’s good name. Debtors who were previously blacklisted in SLIK, with this write-off, their names will be restored. Debtors become healthy again because they are not blacklisted.

This write-off can be done if the losses incurred are not state losses. Not the result of patgulipat or fictitious credit. All of this can be done as long as it can be proven that the action is based on good faith, laws and regulations, articles of association, and principles of good corporate governance. Also, about the limit on the amount of MSME loans that will be whitened.

But, don’t let the good news about the bad credit write-off rule actually damage the mentality of debtors who have credit to then write themselves off. This is only natural because of the concept of banking in the world. The treatment of bad debtors is lighter than good debtors who are current. Good debtors who have been paying interest and loan principal often have to feel jealous of bad debtors who are given many facilities.

Do not let this bad debt bleaching also cause a new disease in the community to not pay loans. This side effect also needs to be considered, for small customers who are also in default at BPRs, online loans and multifinance. Don’t teach them not to pay their debts. The government must be able to communicate this debt “freeing” policy well.

For us to think about, good debtors who are doing well have never been given facilities, while “bad” debtors have their debts written off, and freed up. Do not let this write-off policy invite new moral hazard. Do not let the culture of good debtors who never get incentives become sontoloyo customers who always get incentives.

Hopefully, the Red and White Cabinet – which is fat (as long as it is healthy) – will not interfere too deeply with the provision of credit by banks to entrepreneurs who are their success teams. Write-offs are a good policy for state-owned banks rather than “blusukan” which is just a way to personify being a good person. (*)