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Regulators, industry to improve financial literacy for AEC
Financial regulators and industry players need to work together to improve the financial literacy of the people in preparation for the upcoming implementation of the ASEAN Economic Community (AEC) late next year, according to Ryan Kiryanto, chief economist at state-owned Bank Negara Indonesia (BNI)
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inancial regulators and industry players need to work together to improve the financial literacy of the people in preparation for the upcoming implementation of the ASEAN Economic Community (AEC) late next year, according to Ryan Kiryanto, chief economist at state-owned Bank Negara Indonesia (BNI).
Ryan said the Indonesian financial industry had the greatest potential in Southeast Asia. He added, however, that a lot of effort from all parties was needed to fulfill that potential.
Ryan said that the country's undeveloped financial literacy was shown through the 20.6 percent and 37.5 percent ratios of loans and bank deposits to the country's gross domestic product (GDP), respectively, according to recent data.
The percentage of Indonesia's loan to GDP ratio at 20.6 percent is low compared to 117 percent in Malaysia and 85 percent in Thailand. On bank deposits, Malaysia has reached 147.9 percent and Thailand 110.41 percent.
'We still have five years until the AEC is fully implemented in 2020. I think Indonesia can use the remaining time to reach around 40-50 percent of loan and funding to GDP ratios,' he said during a talk show in Jakarta on Tuesday.
In order to reach the target, Ryan said the Financial Services Authority (OJK) should provide assistance by working hand-in-hand with the financial industry to approach those who have the least knowledge on finance and investment, following the agency's nationwide financial education campaign this year.
'It seems to me that regulators and the industry should exploit the massive developments in IT, the Internet and social media to improve financial education,' he said.
Also on Tuesday, media mogul and MNC Group owner Hary Tanoesoedibjo echoed Ryan's view that the financial industry should be more adept in developing the Internet in order to compete within the AEC, as trends showed that Internet-based systems would increase their dominance in all aspects of business.
- Indonesian financial industry had the greatest potential in Southeast Asia
- The percentage of Indonesia's loan to GDP ratio at 20.6 percent is low compared to 117 percent in Malaysia
Hary also agreed that the regulators needed to engage the financial industry through mutual interaction as a way of creating an effective economic policy to improve people's welfare.
Bank Indonesia (BI) communications department executive director Tirta Segara said his institution continuously coordinated with the OJK to improve financial literacy through the Digital Financial Literacy program, which is part of the branchless banking campaign currently promoted by the latter.
'The branchless banking campaign is more bank-based, while the BI's program covers the whole area of payment systems,' he said.
Meanwhile, Firdaus Djaelani, OJK commissioner overseeing the non-banking financial industry, said he was convinced that insurance penetration in Indonesia would reach at least 10 percent in the next 10 years from currently below 2 percent.
'The OJK will help the industry to push insurance penetration gradually from 2 percent to 2.5 percent, 3 percent and 5 percent over the next 10 years,' he said.
Firdaus added that the positive outlook of the domestic insurance industry would help to achieve the target. He predicted that premium revenue and total assets growth could reach a minimum of 20 percent next year. (gda)
