By: Antonius Utomo*
The financial sector is a crucial foundation for national economic development. The stability of banking, capital markets, the insurance industry, financing institutions, and payment systems are factors that determine the level of public and investor confidence in a country’s economy. In this context, the Financial Sector Development and Strengthening Law (UU P2SK) is a strategic step by the government to strengthen financial sector governance while creating a more transparent, accountable, and adaptive system to the challenges of the times.
Since its first enactment through Law Number 4 of 2023, P2SK was designed as a major reform of Indonesia’s financial sector. This regulation not only integrates various provisions previously scattered across several laws but also strengthens coordination between financial institutions to maintain the stability of the national financial system. The P2SK Law regulates various important aspects, including banking, capital markets, insurance, pension funds, financing institutions, financial sector technology innovation, consumer protection, and strengthening financial system stability mechanisms.
Finance Minister Purbaya Yudhi Sadewa stated that with the ratification of the revision, various new provisions in the P2SK Law will serve as the legal basis for policies and strategic steps by the government and related institutions to encourage the development of a stronger, more inclusive, and sustainable financial sector.
Over time, the government and the House of Representatives (DPR) have continued to refine the P2SK Law to address the increasingly complex dynamics of the global economy. In 2026, the Indonesian House of Representatives (DPR) approved amendments to the P2SK Law, which aim to strengthen legal certainty, clarify the division of authority between authorities, and increase the effectiveness of financial sector supervision. This measure is seen as part of efforts to strengthen the foundations of the national economy while maintaining public trust in the Indonesian financial system.
One of the most important aspects of the P2SK Law is strengthening transparency in financial sector governance. Transparency is a pressing need amidst the increasing complexity of financial products and services. Through this regulation, financial institutions are encouraged to implement the principle of greater information disclosure so that the public can understand the risks and benefits of each product offered. With clearer and more accessible information, the public can make wiser and more informed financial decisions.
Furthermore, the P2SK Law also strengthens consumer protection. In recent years, the development of digital technology has given rise to various financial innovations that provide convenience for the public. However, on the other hand, these developments have also introduced new risks such as data misuse, digital fraud, and unfair business practices. By strengthening supervisory and regulatory authorities, regulators have stronger instruments to ensure that consumer interests are protected.
Accountability is another pillar strengthened by the P2SK Law. The recently passed revisions include strengthened evaluation mechanisms for key financial sector institutions such as Bank Indonesia, the Financial Services Authority (OJK), and the Deposit Insurance Corporation (LPS). This strengthened evaluation function is intended to ensure that every policy taken is accountable to the public and aligns with the goal of maintaining the stability of the national financial system. With clearer supervisory mechanisms, institutional governance is expected to become more effective and professional.
Increased accountability also contributes to growing market confidence. Investors, both domestic and international, tend to invest in countries with strong supervisory systems and clear regulations. When the financial sector is managed transparently and accountably, the risk of uncertainty can be reduced, creating a healthier investment climate. This condition will ultimately support economic growth, job creation, and improved public welfare.
Amidst global economic uncertainty, strengthening financial system stability is a non-negotiable necessity. The government considers the improvement of the P2SK Law a strategic step to ensure Indonesia’s financial sector remains resilient in the face of various external shocks. Through stronger coordination between authorities and a clearer division of authority, responses to potential risks can be implemented more quickly and measurably.
Support for the improvement of the P2SK Law also came from various stakeholders in the financial services sector. Industry stakeholders consider governance reform and strengthening institutional coordination to be crucial steps in building a sustainable economic foundation. With a robust supervisory system,
With improved financial services, the financial services industry has more room to grow healthily while maintaining public trust.
Ultimately, the P2SK Law demonstrates the government and the House of Representatives’ commitment to building a modern, trustworthy, and public-interest-oriented financial sector. Stronger transparency, clearer accountability, better consumer protection, and increasingly effective inter-institutional coordination are essential foundations for creating a healthy national financial system. Amidst evolving global economic challenges, the P2SK Law serves as a strategic instrument to ensure that Indonesia’s financial sector is not only able to maintain stability but also becomes a driving force for inclusive and sustainable economic growth for all Indonesians.
)*Public Policy Observer