Monday, May 26, 2008

Climate makes Indonesia coastlines a credit risk

Jakarta Post (Indonesia): Local banks are set to tighten debt lending, particularly for real estate and property in low-lying coastal areas, an official said recently, due to fears of sea-level rise triggered by climate change. Incentive and environmental funds officer Laksmi Dhewanthi (an assistant to the deputy environment minister) told a seminar recently that many local banks were planning to reassess prices of collateral assets in coastal areas. "Banks are actively seeking details on the impacts of climate change. They are wary of a decline in prices of collateral in coastal areas," she said.

Indonesia's 81,000 kilometers of coastline are the second largest in the world. Coastal areas are home to around 60 percent of the population in Java. Many luxury hotels and other buildings have been built in such areas, as well as fisheries, oil and gas industrial sites, agriculture and tourism areas.

"With a growing awareness of climate change issues, prices of properties in coastal areas have been greatly affected. Consequently, banks plan to tighten credit risk management," Laksmi said...

Map of Indonesia from the CIA World Factbook, Wikimedia Commons

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