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Indonesians tend to shop instead of save, says OJK
Indonesians are becoming more consumptive and tend to not save money, says the Financial Services Authority (OJK)
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Indonesians are becoming more consumptive and tend to not save money, says the Financial Services Authority (OJK).
The OJK's statement is based on the declining ratio of the marginal propensity to save (MPS) in the last three years and the increasing ratio of the marginal prosperity to consume (MPC).
According to OJK commissioner Kusumaningtuti S. Soetiono, MPS has been on the decline since 2011. By the end of 2013, the MPS ratio was below that of the MPC.
'It shows that people spend more money than they save,' she said during a discussion on Saturday as quoted by kompas.com.
Kusumaningtuti said that the high MPC ratio showed that when people had money, they prioritized making purchases instead of saving. In the long term, the habit will affect the availability of funds at banks that can be used to support economic growth.
According to the International Monetary Fund (IMF), the country's gross national savings per gross domestic product (GDP) currently stands at 30.87 percent.
That ratio is below China (48.87 percent), Singapore (46.73 percent) and Korea (35.11 percent), though still above Malaysia, which stands at 29.83 percent.
To encourage people to save, the OJK plans to launch a student savings program. (edn/kes)(+++)
