Mandiri Institute: Financial Inclusion Needs Supporting Ecosystem
10/23/14

Jakarta, 23 October 2014 - The Mandiri Institute is collaborating with the International Finance Corporation (IFC) to hold the 2014 International Financial Inclusion Forum (IFIF), on Thursday, as part of an effort to create a favorable ecosystem for the promotion of financial inclusion in Indonesia. A total of 250 representatives from various sectors, including the executive and legislative branches of government, business, academia, student associations and community organizations, will be on hand to discuss improved access to financial services.

Based on Mandiri Institute research, 48% of Indonesia's total population of 249 million in 2013 lacked access to financial services. In addition, only 20% of people over the age of 15 have accounts with established financial institutions. By comparison, in Malaysia the figure is 66% and in Thailand 73%.

According to the Mandiri Institute's Advisory Board Chairman, Darmin Nasution, lack of access to financial services has resulted in the financial sector's contribution to economic growth in Indonesia being low. He said that this could be seen from a credit to GDP ratio of 36%, compared with 122% in Malaysia and 103% in Thailand, while the deposit to GDP ratio in Indonesia is only 39%, compared to 147% in Malaysia.

"Financial Inclusion is an important topic in both Indonesia and globally, as increased access to financial services helps to generate more inclusive growth," Darmin said.

Currently, financial inclusion in Indonesia is being promoted by means of Bank Indonesia's National Strategy for Financial Inclusion (SNFI) and the Financial Services Authority (OJK)'s National Strategy for Financial Literacy (SNLK). The SNFI covers digital financial services while the SNLK focuses on non-bank financial services (Laku Pandai).

Bank Mandiri CEO Budi G. Sadikin said that a favorable ecosystem was essential to the promotion of financial inclusion. As an example, he said that the channeling of assistance to the public through agent banks could help educate the public about the benefits of digital financial services.

He said that this could also help move people away from consumerist or consumptive behavior to a culture of saving as the assistance was not received in cash but rather deposited in people's personal accounts. "Synergies with other sectors, such as telecommunications, the capital markets, insurance and other financial institutions are also required in order to continue improving the services that are provided to the public," he explained.

International Finance Corporation (IFC) country manager for Indonesia, Survesh Suri, said that increased access to financial services could also help develop micro, small and medium enterprises. Globally, Survesh said, some 200 million SMEs lack access to the financing they need to grow.
"The IFC is committed to supporting the development of strong, inclusive and sustainable financial markets, and to the provision of financial services to micro, small and medium enterprises. The development of digital technology and the latest business innovations enable us and our partners, such as the World Economic Forum, SECO and the Mandiri Institute, to provide support in a more innovative manner and on a larger scale," Survesh said.

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