NATIONAL STRATEGY FOR FINANCIAL INCLUSION TOWARD MICROINSURANCE DEVELOPMENT IN INDONESIA

Transcription

1 Kementerian Koordinator Bidang Perekonomian Republik Indonesia NATIONAL STRATEGY FOR FINANCIAL INCLUSION TOWARD MICROINSURANCE DEVELOPMENT IN INDONESIA Presented by Dr. Erdiriyo, MM. Head of Division for Capital Market and Non Banking Financial Institution Coordinating Ministry for Economic Affairs, Republic of Indonesia Microinsurance Market Place Indonesia Jakarta, July 2017

2 I. National Strategy for Financial Inclusion (NSFI) 2

3 -National Strategy for Financial Inclusion Background- The National Strategy for Financial Inclusion (NSFI) document was initially launched in The document has been revised since 2015 to accomodate Jokowi-JK s policies as directed in National Planning for Medium-Term Development for period of In addition, the NSFI document also compulsory to escalate the integration of inclusion activities which furtherly enhanced since The development was driven by the presence of The Authority of Financial Services (OJK) The implementation of NSFI with a strong institution is needed to increase adult population s proportion access to financial institutions formally, started from 36% in 2014 to be 75 % in

4 -Comparison Development of Financial Inclusion Index between Several Countries- Country Indonesia 20% 36% India 35% 53% Malaysia 66% 81% Thailand 73% 78% Philippines 27% 31% South Africa 54% 70% Sri Lanka 69% 83% Vietnam 21% 31% Source: World Bank,

5 -The NSFI Flows- NSFI Target The Incremental of Financial Inclusion Index from 36% in 2014 to 75% in 2019 Action Program in each Pillars and Foundations Institution NSFI National Council 5 Pillars 1. Financial Education 2. Financial Services in the Government Sector 3. Intermediation Facility and Financial Distribution Channels 4. Community Property Rights 5. Consumer Protection 3 Foundations 1. Condusive Policies and Regulations 2. Supportive infrastructure and Financial Information Technology 3. Organized and Effective Implementation Mechanism 5

6 -NSFI Pillars and Foundations- NSFI Target The Increase of Financial Inclusion Index from 36% in 2014 to 75% in 2019 Financial Education Community Property Rights Intermediation Facility and Financial Distribution Channels Financial Services in the Government Sector Consumer Protection Condusive Policies and Regulations Supportive infrastructure and Financial Information Technology Effective Organization and Implementation Mechanism 6

7 Government Programs -Main NSFI Programs- Acceleration of communities toward land certification Transformation of food assistance s distribution using financial services in term of voucher/digital Integration of social assistance card from non-cash beneficiaries (Combo Card) People s Business Loan (Kredit Usaha Rakyat/KUR) IT network development to entire Indonesian territory Bank Indonesia and OJK s Programs TabunganKU and Basic Saving Account The expansion of electronification program for the government s revenue and payment in the region The expansion of Digital Financial Services Implementation SimPel (Simpanan Pelajar): savings for students published in national level Branchless Banking (Layanan Keuangan Tanpa Kantor Dalam Rangka Inklusi Keuangan/Laku Pandai) 7

8 Pillar 1: Financial Education Action Working Group a.financial inclusion education for Local Government, migrant workers, universities, professionals, retirements and businessmen, small and medium enterprises, and low income households; a.national Campaign: Non-cash National Movement, Indonesia Saving Movement a.capacity building for Financial Inclusion through Training for Trainers for the instructors and communities; Ministry of Education and Culture Ministry of Religious Affairs Ministry for Research & Technology, and High Education Ministry of Finance Ministry of Home Affairs Ministry of Communication and Information Ministry of Manpower Ministry of Agrarian Affairs and Spatial Planning Bank Indonesia Financial Services Authority (OJK) National Agency for Migrant Workers Placement and Protection (BNP2TKI) Financial Services Associations a.dissemination of Land Certification 8

9 Pillar 2: Community Property Rights Action a. Acceleration of the communities land certification: Increase in the number and development of the profession measurement in collaboration with universities, State Owned Bank, and Local Government Free of charge for land sertification for KKS (Kartu Keluarga Sejahtera) beneficiaries Granting the building use rights for vendors in the arrangement area Enacted of BKO system for the measuring in the entire Indonesia Simplify the procedure for land sertification Develop online system for land certification b. Promote for patent, especially for micro, small, medium enterprises and cooperation, and researcher/inovator Free of charge for patent for businessmen in cooperation, micro and small enterprises and household Free of charge for patent for businessmen in the creative business Simplify the procedure for patent proposal Develop online system for patent Working Group Ministry of Agrarian and Spatial Planning Ministry of Cooperation and Small Medium Enterprises Ministry of Law and Human Rights Creative Economic Board 9

10 Pillar 3: Intermediation Facility and Financial Distribution Channel Action a. Saving Products: TabunganKu, Basic Saving Account, SimPel, Postal Saving b. Electronification program for the government s revenue and payment in the region c. Branchless Banking: Digital Financial Services (Layanan Keuangan Digital/LKD), Laku Pandai and Laku Mikro d. Establishment of National Committee for Sharia Finance (Komite Nasional Keuangan Syariah/KNKS) to encourage the development of sharia financial access Working Group Ministry of Finance Ministry of Cooperation and Small Medium Enterprises Ministry of Communication and Information Ministry of Agrarian and Spatial Planning Ministry of National Development Planning Bank Indonesia The Authority of Financial Services (OJK) Financial Services Associations e. Development of micro finance products: JARING 10

11 Pillar 4: Financial Services in The Government Sector Action a.people s Business Loan: Micro, Small, Medium Migrant Worker Placement, KUR toward export orientation, b.integration of social assistant card for non-cash beneficiaries (Combo Card): Keluarga Harapan Program, food assistance distribution using voucher/digital financial services c.non-cash Subsidy Program: agricultural production facilities d.formulation of The Acceleration of Regional Financial Access Team Working Group Coordinating Ministry for Economic Affairs Coordinating Ministry for Human Development and Culture Ministry of Finance Ministry of Social Affairs Ministry of Education and Culture Ministry of Home Affairs Ministry of Agriculture Ministry of Maritime Affairs and Fisheries Ministry of State Owned Company Bank Indonesia, Financial Services Authority (OJK) National Team for The Acceleration of Poverty Alleviation 11

12 STEPS OF MEASURING PROFESSION EDUCATION INPUT PROCESS OUTPUT ACCREDITED BY NATIONAL ACCREDITED AGENCY (BADAN AKREDITASI NASIONAL/BAN) COMPETENCY TEST MEASURINGS WHO ARE READY TO WORK WITH THEIR COMPETENCY SERTIFICATE Highschool graduates EDUCATION INSTITUTION FOR MEASURING AND ASSISTANT OF MEASURING Competency Sertificate for Measuring THE MEASURINGS PARTICIPATE IN THE GOVERNMENT S BIDDING FOR LAND MEASUREMENT 12

13 -Pillar 5: Consumer Protection- Action a. The establishment of the Alternative Dispute Resolution Institutions (Lembaga Alternatif Penyelesaian Sengketa /LAPS) b. Standardization of Internal Dispute Resolution (IDR) c. Strengthening consumer protection in the payment system Working Group Bank Indonesia Financial Services Authority (OJK) Ministry of Trade Ministry of Law and Human Rights Institution in the consumer protection sector 13

14 -Foundation 1: Condusive Policies and Regulation- Action a. Study of Law and Regulation related to telecommunication companies involved in the distribution of social assistance b. Harmonisation of Law and Regulation which support financial inclusion (OJK s regulation related to literacy and financial inclusion) c. Formulating the supporting regulation related to the expansion of the implementation toward digital financial services (Layanan Keuangan Digital /LKD) Working Group Ministry of Finance Ministry of Home Affairs Ministry of Law and Human Rights Bank Indonesia Financial Services Authority (OJK) 14

15 Foundation 2: Supportive Infrastructure and Financial Information Technology Action a. Develop Financial Inclusion Information System (Sistem Informasi Keuangan Inklusif /SIKI) b. Develop Credit Program Information System (Sistem Informasi Kredit Program/SIKP) c. Establish Education Center, Consumer Services, and MSME s Financial Access d. Develop Financial Information Services System (Sistem Layanan Informasi Keuangan/SLIK) e. Develop Information and Technology Network in the entire Indonesia territory Working Group Bank Indonesia Financial Services Authority (OJK) Ministry of Finance Ministry of Communication and Information Ministry of Trade 15

16 -Foundation 3: Organization and Effective Implementation Mechanism- Ministries/ Institutions Local Gov NATIONAL COUNCIL OF FINANCIAL INCLUSION STEERING COMMITTEE Chairman: President Vice Chairman: Vice President Executive Chairman: Coordinating Ministry for Economic Affairs Vice Executive Chairman I: Governor BI Vice Executive Chairman II: Chief OJK Members: Coord. Ministry for Human Dev & Culture Affairs, Coord. Ministry for Politic, Law & National Security Affairs, Coord. Ministry for Maritime Affairs, Ministry of Finance, Ministry of National Development Planning, Ministry of Agrarian and Spatial Planning, Ministry of Social Affairs, Ministry of Communication and Information Affairs, Ministry of Cooperation and MSMEs Affairs Direction Coordination Reporting EXECUTIVE COMMITTEE 1. Secretariat 2. Financial Education Working Group 3. Financial Services in the Government Sector Working Group INDUSTRIAL PARTNER 4. Intermediation Facility and Financial Distribution Channels Working Group 5. Community Property Rights Working Group 6. Consumer Protection Working Group 7. Policies and Regulation Working Group 8. Infrastructure and Financial Information Technology Working Group 16

17 -Targets and Indicators of Financial Inclusion- TARGETS 1. The low income and vulnerable community (community groups consist from 40% of lowest income), businessman of MSME 2. Community target that are cross group, i.e.: a. In-country and international migrant worker b. Women c. Community groups with social welfare problems d. People in the disadvantage areas, border areas, and outer islands e. Junior tertiary students and youth groups INDICATORS Access: a. The number of formal financial services offices per 100,000 of the adult population b. The number of ATM/EDC/mobile pos machines per 100,000 of the adult population c. The number of financial services agents per 100,000 of the adult population d. The availability of infrastructure supporting financial inclusion Usage: a. The number of saving accounts in formal financial institution per 1,000 inhabitants; b. The number of credit accounts in formal financial institutions per 1,000 inhabitants c. The number of electronic money accounts registered at the LKD agents d. Percentage of loans/financing of SMEs to total loans/financing in formal financial institutions e. The total number of SME credit accounts at formal financial institutions per 1,000 inhabitants f. The increase number of land plots provided with official certificates g. The number of recipients of channeled with non cash social assistance Quality: a. Financial literacy index b. The number of complaints of financial services c. The percentage of service complaints solving 17

18 PRESIDENTIAL DECREE OF NSFI 1. The enactment of NSFI document 2. Establishment of National Council of Financial Inclusion consist of Steering Committee and Working Groups 3. Steering Committee chaired by President with the involvement of the Governor of Bank Indonesia and the OJK s chief as Vice Executive Chairman 4. Working Groups members consist of government and business party in financial sector 5. Task and function establisment toward the Working Groups and Secretariat, ruled by the Coordinating Ministry for Economic Affais Ministerial Decree 18

19 II. National Strategy for Financial Inclusion (NSFI) toward Microinsurance Development in Indonesia. 19

20 -Current Economy Overview of Indonesia- Trend of Indonesia Economic Growth (%) Trend of Gini Ratio in Indonesia (index) National Survey of OJK Despite of Indonesia s Economic Performance exhibit growth from 3.64% in 2001 to 5.01% in 2016, Gini Ratio Index in Indonesia declined from 0.33 in 2001 to 0.39 in It reveals that inclusive development is needed in order to diminish the gap between the poor and the rich people in Indonesia. Meanwhile in term of financial inclusion level based from OJK s survey in 2016, there was improvement level from 59.74% in 2013 to 67.82% in Source : BPS and OJK, Financial Literacy Financial Inclusion Target of financial inclusion in Indonesia will be 75% in The inclusive development will be imperative involving financial inclusion expansion from various related stakeholders such as micro finance institution and insurance entities related to micro insurance products in Indonesia. 20

21 -Projected Level of Financial Inclusion in Indonesia- 2014: 36% 2016: 52% 2018: 68% 2015: 44% 2017: 60% 2019: 75% Source : World Bank, Note: 1. Target is set based on expectation that financial inclusive index will raise 8% each year ( ) to achieve main financial index target of 75% in year of The definition of financial inclusive level is the percentage of adults possessing account in formal financial institution 3. Reference for financial inclusive in year of 2014 used number from World Bank Group Financial Inclusion Index 4. OJK s financial literacy and inclusive survey in year of 2016 exhibits that financial inclusive index in Indonesia already achieved 63%: 21

22 -Microinsurance Brief Overview in Indonesia- To achieve 75% of financial inclusion target level in 2019, the utilization toward various financial institution will be essential in accordance to reach every side within the society In accordance with the fact that : 1. numerous islands spread in Indonesia (approximately islands) whereas 50% of those are rural areas; 2. among 77 million of population targeted as Micro Finance s consumer, only 5% of them that already have insurance. There is bunch of potentiality to enhance utilization of micro insurance in Indonesia. Current Microinsurance Condition in Indonesia Survey from OJK in 2015 to 1,271 respondents (consist of farmers, housewifes, grocers, and small medium enterprises) revealed that : Knowledge of Insurance from Participants 75% 74% 61% 48% 47% 45% 44% 41% 34% 25% 26% 39% 52% 53% 55% 56% 59% 66% Having Knowledge Having no Knowledge 22

23 -Microinsurance Brief Overview in Indonesia- Main Reasons for Lack of Insurance Ownership from the Participants Insurance Products which Currently (or Ever) Possessed by Participants 43% 34% 45% 21% 21% 29% 8% 3% 2% 1% Lack of Information Lack of Fund Health Insurance (N=621) Life Insurance (N=449) Education Insurance (N=295) Vehicle Insurance (N=307) Fire Insurance (N=129) Unitlink Insurance (N=46) Disaster Insurance (N=29) Flood Insurance (N=20) Religion Community 5% Newspaper/Maga zine 5% The Suitable Media Preferred by Participants to Acquire Knowledge About Insurance Media Social/Internet 11% Brochure/leaflet 11% Agents/Neighbour s/friends 15% Cooperation 5% TV/Radio 48% The majority of participants which came from lower level of income did not know insurances (product, benefit, activities) Lack of information and Lack of Fund are the main reasons for participants for not having insurance, depicted with only 1-2% ownership from those participants with lower level of income (farmers/fishermen --- disaster insurance/flood insurance). 80% from the population in agricultural and fishery sector are within the poverty. There is suggestion emerged from the survey, that 48% of the participants preferred the usage of Television and Radio to get information about any kind of insurance socialization 23

24 -Possible List to Do toward Microinsurance Enhancement in order to Increase Financial Inclusion and Financial Literacy in Indonesia - 1 Developing appropriate products within areas in Indonesia (Right Products on the Right Places) 2 Creating Products that are Easy to be Understood by People and Prospective Consumer in Indonesia with Suitable Media/Channels to Deliver the Information about the Products 3 Simplification of Cooperative Regulation from Government toward Enlargement of Microinsurance in Indonesia Financial Inclusion 4 Developing Effective and Efficient Ways of Claim Settlement (i.e : utilization of advance technology) Financial Literacy 24

25 Kementerian Koordinator Bidang Perekonomian Republik Indonesia Sekretaris Komite Kebijakan Pembiayaan Bagi UMKM Deputi Bidang Koordinasi Ekonomi Makro dan Keuangan Kementerian Koordinator Bidang Perekonomian Gd. Ali Wardhana Lt. 3, Jl. Lap. Banteng Timur No. 2 4, Jakarta Telpon: Fax: