Survey
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
* Your assessment is very important for improving the workof artificial intelligence, which forms the content of this project
Financial economics wikipedia , lookup
Systemic risk wikipedia , lookup
Public finance wikipedia , lookup
Shadow banking system wikipedia , lookup
Global financial system wikipedia , lookup
Financial Sector Legislative Reforms Commission wikipedia , lookup
Financial literacy wikipedia , lookup
Financial crisis wikipedia , lookup
Financial Crisis Inquiry Commission wikipedia , lookup
Systemically important financial institution wikipedia , lookup
FINANCIAL INCLUSION AND MSME PROGRAMS IN INDONESIA Pungky P. Wibowo Director Department of MSME and Financial Access Development Bank Indonesia APEC 37th Meeting SMEs Working Group 2013 OUTLINE Access to Finance Condition in Indonesia Financial Inclusion and MSME Program Collaboration and Strategic Partnership 2 1 2 3 FACTS OF INDONESIA World Bank (2011) : There is only 20% of Indonesian adults have owns account balance in formal financial institution Central Asia & Eastern Europe High income OECD & nonOECD Middle East & North Africa 92% Indonesia Malaysia Philippines Thailand Vietnam India China Russia Brazil 50% East Asia & Pacific 42% Sub-Saharan Africa 19.6% 66.7% 26.5% 77.7% 21.4% 35.2% 63.8% 48.2% 55.9% 12% 42% South Asia 22% INDONESIA 20% Latin America & Caribbean 40% 3 Indonesia has a huge economic potential and large market for financial services • • • • • More than 13,000 islands Population: + 234 million 1) GDP Growth 2012: 6.23% yoy 2) GDP per capita Dec 2012: USD 3.051 2) Banking industry covers ± 75.8% of assets in financial sector Source: 1) BPS, 2010; 2) BPS, 2012 Sourcer: Worldbank, Global Financial Inclusion Index , 2011 Market Share of Indonesia Financial System by Total Assets 0.10% 0.10% 2.80% 6.10% 3.30% 0.50% Commerical Bank Rural Banks 10.10% Insurance Company 1.20% Pension Funds 75.80% Multifinance Companies Venture Capital Securities Company Mutual Fund Pawn Broker (Dec'11) Source: Bank Indonesia and Bapepam-LK, 2012 NUMBER OF FINANCIAL INSTITUTION 120 Commercial Banks 1.653 Rural Banks 1397 Insurance Companies 269 Pension Funds 200 Multifinance Companies 89 Venture Capital 754 Securities Companies Credit Guarantee 6 Company 1 Pawn Broker INDONESIAN POVERTY CHARACTERISTIC 4 There is a huge gap in poverty level disparity between provinces in Indonesia (Jakarta = 4%, Papua = 31%, Indonesia = 12 %) 27.04 30.66 35.00 Poor people (%) 25.00 3.70 3.95 5.01 5.37 5.71 6.19 6.38 6.83 7.64 7.96 8.00 8.05 8.06 8.28 9.82 9.89 10.41 11.66 13.01 13.06 13.08 13.48 14.94 14.98 15.65 15.88 17.22 17.51 18.02 18.58 20.41 20.76 30.00 BIG GAP 20.00 15.00 10.00 5.00 0.00 Source : BPS, 2012 LEVEL OF ACCESS TO FINANCIAL SERVICES 5 • More than 50 per cent of Indonesia household have no access to bank financial services • Less than 20 per cent of Indonesia poor household have access to bank financial Source : Improving Access to Financial Services in Indonesia, World Bank, 2010 services THE ROLE OF MSME IN INDONESIAN ECONOMY 6 MSME are the back bone of Indonesia’s economy but they get only a small portion of banks’ financing MSME play a crucial role in Indonesia’s economy: MSME are dominating the business units with share up to 99,9% of total business units. MSME absorbs around 97,2% of total labor force. MSME contributes around 59.1% to the GDP. Contribution to GDP Job Creations MSME, 97.2% Large Scale, 40.9% MSME, 59.1% Large Scale, 2.8% The trend of MSME Credit Source: MSME Statistics 2012, Ministry Cooperatives and MSME The Medium Scale Enterprise loan dominates the MSME Credit (49,73%) The growth of MSME Credit around 15,39% (yoy) and around 10,83% (yod) Source: Bank Indonesia, June 2013 CONSTRAINT OF POOR HOUSEHOLD AND MSME Innovation is needed to address the constraint of financial inclusiveness… SUPPLY SIDE Asymmetric information Transaction cost vs Profit Gained Service and Product are not fully fit to the need of people High Technology for effective the distibution channel Regulation and Policy for effective access to finance DEMAND SIDE Limited financial capability, education, experience and psychological factors Limited skills and capability in doing business Formal identity problem 7 OUTLINE Access to Finance Condition in Indonesia Financial Inclusion and MSME Program Collaboration and Strategic Partnership 8 1 2 3 FINANCIAL INCLUSION FRAMEWORK Main Goal 9 To reach economic welfare through poverty reduction, distribution income, and financial system stability in Indonesia by creating financial system that can be accessed by whole people in this country Equitable Income Distribution Financial System Stability Poverty reduction Productive and high purchasing power society Easy access to financial system Target Groups Migrant Employee Group and People in Remote Areas Very Poor Working Poor/ Productive Near Poor Non - Poor Strategy 6 Pillars of Financial Inclusion Financial Education Public Financial Facility Mapping on Financial Information Supporting Regulation/ Policy Intermediary/ Distribution Facility Customer Protection BALANCING POLICY FOR FINANCIAL INCLUSIVE & PRUDENT OPERATION Inclusive 1. Simplicity; 2. Customized; 3. Flexible Prudent Indonesia Policy 1. 2. 3. 4. Equal Treatment; Procedural; Standards; Compliance based; 10 FINANCIAL INCLUSION AND MSME PROGRAMS FINANCIAL INCLUSION AND MSME Strategy Program • Education (poor household & MSME) • National Campaign • Research and Diagnostic • Gov’t Credit Programs • G2P channel •Financial Identity Number (FIN) •MSME information system • Multilicensing • Provision of Credit / Financing by Commercial Bank and Technical Assistance for MSME development • Branchless banking • TabunganKu • Branchless banking • “Start-Up” Credit • Land Certification • MSME Rating • Credit Bureau • Micro Insurance • Banking Mediation • Product Transperancy 11 12 12 Financial Education Branchless Banking G2P transaction eg. Disbursement of social program Bank Led/Telco Led Hand Phone number Price Information As account number of no frill account “TabunganKu” TabunganKu/ basic saving account Financial Inclusion Information System database Survey Financial Literacy Research & Diagnostic Financial Identity Number Customer profil data Credit Rating Micro credit Progress of Financial Inclusion Program: What have we done so far? 2009 Financial Education TabunganKu/ Basic saving account 2010 2011 2012 2013 13 13 2014 Blueprint of Financial Education National Campaign “Let’s Go to the Bank” TabunganKu Indonesia Saving Movement (Gerakan Indonesia Menabung) Intensive campaign of GIM Let’s Go to The Bank Financial Literacy Survey Financial Identity Number Branchless Banking Baseline and Comprehensive Survey FIN Information System Development Research on Branchless Banking Development Guiding Principle for Branchless Banking Pilot Project Pilot Project Start-up credit System Information of Financial Inclusive (SIFI) Development of financing scheme and financing generic model Tailoring Strategy for SIFI PROGRESS OF FINANCIAL INCLUSION PROGRAM No. 1. 2. Program & Target Progress Financial Education a. Student (elementary, junior high/equal, senior high/equal, university) • to enhance financial education • to input financial education to national curriculum Integrate financial education into National Curriculum for Senior High School in 2013 b. Migrant worker • To enhance financial education Assessment to integrate financial education into basic curriculum of worker training. c. Certain society group including migrant worker • To enhance financial education. Preparation of material and financial education plan. Financial Identity Number (FIN) General society, especially unbanked people. 3. Goal 14 Provide the database of unbanked people , that can be accessed by financial institution to bridge the an asymmetric information. FIN Database development : • Baseline survey : 400.000 data • Comprehensive survey : 600 data To broaden the financial services access for society through “no frill account” product TabunganKu June 2013: 3,93 millions accounts in the amount of Rp4,31 trillions TabunganKu / Basic Account General society & student Champaign : Indonesia Saving Movement General society & Student As an effort to increase society awareness to saving Bank Indonesia, sent an appeal letter to all banking sectors to support the Saving day (Hari Rajin Menabung) PROGRESS OF FINANCIAL INCLUSION PROGRAM No. 4. Program & Target Enhance financial service access using technology instead of physical bank. Branchless Banking Pilot project • Participant : 5 banks and 3 telecommunication companies • Conducted in 8 provinces in Indonesia. Development of supporting regulations for Branchless Banking. Credit for beginner (Start-up credit) Beginner entrepreneur 6. Progress Branchless Banking Remote area society & Unbanked people 5. Goal 15 Developing financing scheme for beginner entrepreneur Development of Financing Scheme System Information of Financial Inclusive (SIFI) General Society • • • Tailoring financial inclusive policy and regulation. As a base for decision making Database study material. Tailoring Strategy of SIFI OUTLINE Access to Finance Condition in Indonesia Financial Inclusion and MSME Program Collaboration and Strategic Partnership 16 1 2 3 COLLABORATION AND STRATEGIC PARTNERSHIP IN NATIONAL AND REGIONAL ECONOMIC DEVELOPMENT 17 17 • Endorsement & constitution supports • Policy • Regulation Bank Indonesia / OJK Banking Association • Capacity Building • Infrastructure Synergy DPR / DPD Related Ministry National Economic Regional Economic • Championship Sector • Sectoral fostering and development Education institution Capacity Building Regional Office of Regional Bank Government Indonesia BPD / BPR • Mapping leading • Regional Banks and sector & regional Rural Banks creative industry development • Main player and regional host • Business model • Finance • Pioneer of Decreasing Micro Interest development. Infrastructure: Rate PPKD WAY FORWARD In order to improve access to finance services, particularly for the unbanked people, Indonesia recognising: • The importance of combating financial illiteracy that can increase financial capability and assist the effectiveness of financial inclusion through financial education; • The importance of innovative delivery channel (namely branchless banking and Financial Identity Number (FIN)) in order to increase access and to broaden the outreach financial services for unbanked people; • The importance of a strong collaboration and coordianation among the parties involved to achieve synergy and avoiding redundancy for efficiency and effectiveness because financial inclusion is an ongoing process. 18 Thank You