JAKARTA (TheInsiderStories) – Amid 2019’ optimism, Indonesia’s Financial Services Authority (FSA) mentioned that there are still downside risks. However, the agency believes that the financial sector will grow positively in 2019, along with high economic growth and low inflation.
In the yearly meeting with key financial market players on Friday (01/11), the chairman Wimboh Santoso, stated credit growth is expected to be in the range of 13 to 14 percent during 2019, with deposits growth at the level of 8 to 10 percent.
“Optimism for growth in 2019 is reflected in the 2019 Bank Business Plan, which targets credit expansion and deposits of 12.06 percent and 11.49 percent respectively,” he said.
In the capital market, Santoso projects an additional 75-100 new issuers with fund raising estimated to be around Rp250 trillion (US$17.24 billion).
While, in the Non-Bank Financial Industry, the growth of life insurance assets and general insurance is expected to grow by 10 to 13 percent and 14 to 17 percent respectively. Assets of finance companies grew by 8 to 11 percent.
Meanwhile, pension fund assets are estimated to grow moderately, around 7 to 9 percent percent for Employer Pension Funds and around 13 to 16 percent for Financial Institution Pension Funds.
To support this target, the agency has prepared five policies that focus on developing priority sectors. The five policies are enlarging medium-term financing alternatives through debt or sharia-based securities issuance, Limited Investment Funds, Asset Backed Securities, Real Estate Investment Funds, Infrastructure Investment Funds, derivative instruments in the form of Indonesia Government Bond Futures, Medium Term Notes, and development of sharia-based investment products, including Sukuk Wakaf.
Then, FSA also encourages the realization of the Special Economic Zone Tourism program in collaboration with relevant agencies.
“In addition, we also support the acceleration of the role of the Indonesian Export Financing Agency (LPEI) in encouraging exports,” said the former Bank Indonesia’ executive.
Furthermore, the FSA will enhance cooperation with relevant institutions and agencies in facilitating people’s business credit distribution with a target of Rp140 trillion, through a cluster scheme for micro, small and medium enterprises in the tourism sector and exports, also the establishment of 100 Micro Waqf Banks by the end of 2019.
The institution also encouraged the innovation of the financial services industry in facing and utilizing the industrial revolution 4.0. Finally, FSA will utilize technology in business processes, both in technology-based banking supervision, and faster licensing including the fit and proper test process from 30 working days to 14 working days.
The FSA noted that the financial sector intermediation could be maintained well in 2018. As for the number of bank credit growth which increased 12.9 percent, it grew compared to 2017 at 8.24 percent. Likewise, the performance of intermediary financing institutions, which is estimated to grow at around 6 percent.
The gross ratio of non-performing loans of the banking sector was recorded at 2.37 percent (net 1.14 percent) and the ratio of non-performing financing gross was 2.83 percent (net 0.79 percent). Banking liquidity is also quite adequate even though the loan to deposit ratio has increased to 92.6 percent. This can be seen from the excess reserve banking which was recorded at Rp529 trillion.
The bank’s capital adequacy ratio was recorded at 23.32 percent, while the Risk-Based Capital general insurance and life insurance industries were 315 percent and 412 percent respectively, higher than the 120 percent threshold. The gearing ratio of finance companies was recorded at 2.97 times, far below the maximum threshold of 10 times.
In the capital market, the number of new issuers throughout 2018 was recorded as 62 issuers, higher than 2017 as many as 46 issuers, with the value of raising funds amounting to Rp166 trillion. The total managed fund investment reached Rp746 trillion, an increase of 8.3 percent compared to the end of 2017.
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