Inter-Agency Synergy Supports Strengthening Economic Recovery
By: Alif Fikri)*
The government continues to strive to restore the national economy without in the slightest ruling out the handling of the Covid-19 pandemic. Therefore, the Government encourages the strengthening of synergy between state institutions in order to optimally realize economic improvements according to the specified target.
2022 seems to be the momentum for the national economic recovery. The President of the Republic of Indonesia, Joko Widodo, has encouraged the financial services authority (OJK) to continue to strengthen the synergy between institutions. Jokowi himself appreciated the performance of the OJK during 2021 which had coordinated well with various relevant stakeholders.
In a virtual speech at the 2022 Financial Services Industry Annual Meeting (PTIJK) which was held in a hybrid manner in Jakarta, Jokowi said that the financial services sector and the real sector must support and strengthen each other, because without a good financial services sector, the national economy will not be good and sustainable.
Jokowi explained that the momentum for economic recovery must also be strengthened by continuing to encourage financing in the MSME sector. Given that the MSME sector has a very large contribution in maintaining economic stability in the community.
In 2024, Jokowi targets the portion of MSME loans to reach 30 percent and to achieve that, of course, breakthrough strategies and serious, consistent and sustainable actions are needed. President Jokowi hopes that with the support of the financial services sector in financing, there will be no more complaints about access to credit to MSMEs or the informal sector.
The former Mayor of Surakarta said that this must be facilitated and accelerated so that it can provide great opportunities for the younger generation to start businesses and MSMEs to develop. MSMEs can be an important component to restore the economy.
Jokowi also emphasized the importance of policies to develop new economic sources to create added value for the national economy, including those related to the environment.
On that occasion, the President also launched the Indonesian Green Taxonomy initiated by the OJK as a form of support for the government as the 2022 G20 Presidency. The Green Taxonomy is also proof of OJK’s commitment to the development of the green economy as a new economic sector.
The Green Taxonomy of Indonesia, which was compiled with eight ministries, contains a list of classifications of economic activities that support environmental protection and mitigation and adaptation to climate change.
Indonesia’s Green Taxonomy has also reviewed 2,733 economic sector and sub-sector classifications with 919 of which have been confirmed by the relevant ministries and made Indonesia one of the few countries in the world that have national standards related to the green economy sector, such as China, the European Union and ASEAN.
This Green Taxonomy of Indonesia will be a guideline for the formulation of policies (incentives and disincentives) from various ministries and institutions, including OJK. Wimboh Santoso as Chairman of the OJK Board of Commissioners said in his opening remarks that he was optimistic that the performance of the industry in the financial services sector in 2022 would improve.
His party projects that in 2022 banking credit will increase in the range of 7.5 percent or approximately 1 percent (6.5-8.5 percent) and Third Party Funds will grow in the range of 10 percent or approximately 1 percent (9-11 percent).
Wimboh assessed that the optimistic projection was driven by economic conditions and the financial services sector which continued to improve, supported by the successful handling of Covid-19 by the government. Indonesia’s financial system is also well maintained as can be seen from the controlled financial system stability index in 2021.
To achieve this projection, OJK has set priority policies in 2020. One of them is to provide joint incentives to encourage financing to the commodity sector according to government priorities, such as battery-based electric motor vehicles from upstream to downstream and further stimulus to encourage credit to the property sector.
In addition, OJK also expands financial access to the public, especially MSMEs to achieve the target of MSME lending of 30 percent by 2024. This is realized by the cluster model in a financing ecosystem, marketing by off-takers, coaching and optimizing uncultivated land. OJK will also continue to mitigate excess online lending by increasing prudential regulations with higher capital and implementing better market conduct.
It is appropriate to strive for strengthening economic recovery, so that people who were previously affected by the pandemic can return to their productive activities, and move the joints of the economy, especially in the MSME sector.
)* The author is a contributor to Pertiwi Institute