Governor of the Indonesian Central Bank (BI), Perry Warjiyo, said the monetary authority is determined to strengthen the effectiveness of the macroprudential liquidity incentive (KLM) policy implementation.

"Until the second week of February 2025, BI has provided this incentive of Rp295 trillion (US$ 18 billion), an increase by Rp36 trillion from Rp259 trillion at the end of October 2024," Perry said on Wednesday, February 19, 2025.

The incentives were mostly given to private banks at Rp131.9 trillion, State-owned enterprise (SOEs) bank group at Rp129.2 trillion, regional development banks (BPD) at Rp28.7 trillion and foreign bank branches (KCBA) at Rp4.9 trillion.

KLM since January 1, 2025 is directed to encourage bank credit to support growth and job creation sectors. These sectors include agriculture, trade and manufacturing, and transportation.

Also included are warehousing, tourism and creative economy, construction, real estate, public housing, micro, small and medium enterprises (MSMEs), ultra micro and green sectors.

Perry ensured that BI continued to strengthen coordination with the government to support the success of President Prabowo Subianto's program by increasing KLM.

"This is to encourage credit growth or banking financing in priority sectors, including the housing and agricultural sectors," he said.

BI, in coordination with the Ministry of Housing and Settlement Areas, already has a Housing Financing Liquidity Facility (FLPP) program.

"FLPP has so far been funded by the APBN (state budget). But to push it further, what if the funds came from KLM? That's what we formulated," Perry said.

He said further that by maximizing the KLM program, it is expected to increase the distribution of FLPP financing from 170 thousand houses to 270 thousand houses and to 400 thousand houses.

BI also coordinates to support President Prabowo's program in the agricultural sector, starting from agricultural downstreaming and food security.

"We will discuss our programs with related ministries and institutions so that the programs will run, then the credit can run, and we provide the liquidity incentives," Perry concluded.