New Hopes and OJK Strategies in Indonesia's Economic Recovery

New Hopes and OJK Strategies in Indonesia's Economic Recovery

The US Centers for Disease Control and Prevention (CDC) said the omicron variant of the corona virus did not cause as severe an impact as the delta variant.

The CDC report brings new hope for the recovery of the Indonesian economy. Although still in standby mode, efforts to recover the economy continue to be carried out as sought by the Financial Services Authority (OJK).

Until December 2021, OJK noted that the stability of the national financial sector was in a well-maintained condition with the performance of the financial services industry continuing to improve, supported by regulatory and supervisory work as well as solid OJK policies and economic conditionswhich is getting better.

National banking credit distribution until December 2021, recorded an increase of 5.2% (yoy) or improved compared to December 2020 which was minus 2.41%. .Meanwhile, credit risk was maintained below 5% with a gross NPL of 3.00% or improved compared to 2020 at 3.06%.

while the condition of the Capital Market has recovered to its pre-pandemic level as indicated by the JCI which has reached 6,693 on January 14, 2022. This figure is far above the JCI during the Covid-19 pandemic starting on March 2, 2020, which was 5,361.25. The achievement of this index is the 3rd best ranking in Asia.

The stability of the national Non-Bank Financial Industry is well maintained, supported by a fairly strong capital, this is indicated by the Risk Based Capital (RBC) of the life insurance industry (539.8%) and general insurance (327.3%), well above the threshold limit.

provisions of 120%.Until the end of 2021, public access to digital finance will also continue to increase, such as the growth of peer-to-peer lending borrowers reaching 29.69 million borrowers, this number is an increase of 68.15% compared to 2020In addition, the growth of Securities Crowdfunding investors has reached 93,733 investors since its launch in early 2021.

Economic Growth in West Java

Head of OJK Regional 2 West Java Indarto Budiwitono said the stability of West Java's financial system was maintained.

"OJK KR 2 West Java together with the Regional Government in West Java, the Financial Services Industry and other stakeholders are always trying to improve access to finance for the people of West Java which is believed to be able to encourage national economic recovery and..level of social welfare."said Indarto in the Launching of Media Corner and Friday Blessing with Media.

One of the efforts made, he said, was through the implementation of the work program of the West Java Regional Financial Access Acceleration Team (TPAKD).

The West Java TPAKD is expected to function as an accelerator to encourage the availability and utilization of financial products and services in accordance with the needs and capabilities of the people in West Java.

"Alhamdulillah, the real role of the West Java TPAKD is starting to show results, with the 2021 TPAKD Award as the Best Province in the Implementation of Financing Through Partnership Patterns," he said.

Indarto emphasized that we will maintain this achievement and continue to improve it so that all West Java people will benefit from the existence of TPAKD.

Media Role

on this occasion, Indarto also asked for the participation of the media to be able to contribute to increasing the financial inclusion of the people of West Java.

"The media in this case plays an important role for the continuity of the delivery of news and information related to the expansion of financial access for the people of West Java," he said.

"We hope that the synergy with stakeholders and the media will continue to be well established, so that economic recovery can go hand in hand with government policies to suppress the spread of COVID-19," he concluded.

Five OJK Priority Policies in 2022

Indarto explained from existing records Public Third Party Funds (DPK) by West Java Banking grew by 8.64% yoy. in line with the growth of deposits, lending/financing also grew positively by 6.17% yoy.

In the midst of the development of financial intermediation, he explained, bank credit risk in West Java was still at a manageable level and improved from the previous period with a gross Non-Performing Loan (NPL) indicator in December 2021 of 3.51%(December 2020: 3.90%).

Meanwhile, from capital market penetration in West Java, the number of Single Investor Identification (SID) recorded a growth of 115% to 1.5 million or 21.3% of the total National SID and took first place, followed by DKI Jakarta and East Java.

As for stock transactions as of December 2021, it reached Rp441 trillion or around 9.1% of the National transaction.

"In 2022, OJK projects the growth of banking credit nationally in the range of 7.5 percent ± 1 percent (6.5 – 8.5 percent) and Third Party Funds to grow in the range of 10 percent ± 1 percent (9 – 11 percent).” he said.

OJK also estimates that fundraising in the capital market will increase in the range of Rp. 125 trillion - 175 trillion.

Meanwhile, financing receivables by financing companies will also grow by around 12 percent ± 1 percent (11-13 percent). assets of life insurance companies and assets of general insurance and reinsurance companies are estimated to grow 4.66 percent and 3.14 percent, respectively.

Meanwhile, the growth of pension fund assets will reach 6.47 percent.

To achieve this projection, the OJK has set five priority policies in 2022 aimed at strengthening the stability of the financial services sector and promoting national economic recovery as well as continuing to improve education and protectionconsumer.

1. provide joint incentives to encourage financing to the commodity sector according to Government priorities, namely (a) Battery-Based Electric Motorized Vehicles (KBL BB) from upstream to downstream; (b) Continued stimulus to encourage credit to the sector property

2. prepare the financial sector to face policy normalization in developed and domestic countries, among others by encouraging the consolidation of the financial services sector in order to have capital and liquidity resilience, accelerating the formation of reserves for write-offscredit so that there is no cliff effect when normalized in 2023, structuring the mutual fund industry and strengthening investment management industry governance, as well as accelerating and completing IKNB reforms.

3. Develop a sustainable financing scheme in the financial services industry to support the development of a new economy, with a priority on developing a green economy, including the establishment of a carbon market and the issuance of the Indonesian Green Taxonomy. OJK together with the Indonesia Stock Exchange, KSEI and KPEI as well as the Government are accelerating the regulatory framework for the Indonesian carbon market.

4.expand financial access to the public, especially MSMEs to achieve the target of lending MSMEs of 30 percent by 2024 with a cluster model in one financing ecosystem, marketing by off-takers, coaching and land optimizationwhich has not been worked out.KUR Cluster programs, credit/financing against moneylenders, digitization of BPRs, and Microfinance Institutions, Micro Waqf Banks as well as marketing schemes through the National Proudly Made Indonesia Movement program are included in this program. .In the Capital Market, MSME financing will continue to be developed through security crowd funding.

5. strengthening digital transformation policies in the financial services sector to be in line with the development of the digital economy ecosystem in increasing public access to financial products and services at lower prices, better quality, and fast access, including literacy and protection of consumer interests including law enforcement.

"OJK will continue to mitigate excess online lending by increasing prudential rules with higher capital and implementing better market conduct," he concluded. (****)