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Indonesian market, finance second best performing in ASEAN: OJK
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President Joko “Jokowi” Widodo (left), alongside Financial Services Authority chairman Muliaman D. Hadad (center) and Indonesia Stock Exchange (IDX) president director Tito Sulistio, applauds after opening the IDX's first trading session of 2016 on Jan. 4. (Kompas)
T
he Indonesian financial and market sectors are the second-best performing in Southeast Asia, providing enough ground to support the economic growth target this year, the Financial Services Authority (OJK) has claimed.
The fundamentals in the first quarter are stable with stronger capital in banks and insurance, and the non performing loans (NPL) ratio is under control, said OJK chairman Muliaman Hadad.
"We were the second-best performing finance industry in ASEAN after Thailand in the first quarter of the year. Many listed companies have been seen booking profits this quarter," he said in Jakarta on Tuesday.
In the first quarter, tier I capital in the banking industry reached 22 percent to assets, while the risk-based capital of the insurance industry was at 534 percent for life insurance and 262 percent for general insurance, far above the 120 percent minimum requirement.
“The NPL is under control at 2.83 percent," Muliaman said, adding that the net asset value (NAV) of the mutual fund industry stood at Rp 299 trillion (US$22.5 billion) in April, growing 9.95 percent year-on-year.
With such progress, he said, Indonesia would be able to reach its target growth of 5.2 percent to 5.6 percent this year, a significant increase compared to 4.79 percent last year.
However, the OJK is currently trying to push banks to rebalance their funding composition amid the low interest environment. Several banks insist on maintaining their high interest margins because of poor efficiency.
"The target of credit growth is relatively high at 13 percent. While the government is pushing for cheaper interest rates, those inefficient banks with high interest margins and high operating costs to operating profits [BOPO] ratio will hardly be able to compete," Muliaman said.
Another challenge comes from the limited number of investors in both the financial and capital markets. The OJK has been pushing for investment education as well as promotion to attract more companies to list their shares on the capital markets, or to seek funding from the finance sector.
"I am happy that the IDX [Indonesia Stock Exchange] has made a joint program with Kadin [Indonesian Chamber of Commerce and Industry] for coaching. Please realize this program faster," Muliaman said. (ags)
