Financial Literacy Towards Financial Well-Being: Indonesia Experience

Transcription

1 Financial Literacy Towards Financial Well-Being: Indonesia Experience Presented by Sarjito Deputy Commissioner of Financial Education and Consumer Protection Indonesia Financial Services Authority 1

2 Agenda Result of National Survey on Financial Literacy and Financial Inclusion in Strategy and Regulation on Financial Literacy in Indonesia 4 3 Current Implementation of the National Strategy and Regulation on Financial Literacy Conclusion 2

3 Result of National Survey on Financial Literacy and Inclusion (2016) INDONESIA NATIONAL INDEX 21,8% 29,7% * 59,7% 67,8% * The result of the survey shows that Indonesia s financial literacy index is rising for 7.9%. Similar growth also shown for financial inclusion index which increases for 8.1%. FINANCIAL LITERACY INDEX FINANCIAL INCLUSION INDEX *) α =5% Source: OJK, 2016 SECTORAL INDEX 80,00% 67,8% 63,6% 2016 Literacy 2016 Inclusion 60,00% 40,00% 20,00% 0,00% 29,7% 28,9% 15,8% 17,8% 12,1% 10,9% 13,1% 11,9% 10,5% 4,7% 4,4% 1,3% National Banking Insurance Pension Fund Financing Pawnshop Capital Market 3

4 Result of National Survey on Financial Literacy and Inclusion (2016) INDONESIA NATIONAL INDEX Sumatera Literacy: 30,1% Inclusion: 70,5% Kalimantan Literacy: 27,4% Inclusion: 64,3% Sulawesi Literacy: 26,1% Inclusion: 66,1% Maluku Papua Literacy: 23,7% Inclusion: 62,0% Java Literacy: 37,11% Inclusion: 71,6% Bali Nusra Literacy: 29,0% Inclusion: 67,2% Nasional Literacy: 29,7% Inclusion: 67,8% 4

5 Result of National Survey on Financial Literacy and Inclusion (2016) DATA RESULT OF OECD QUESTIONNAIRE using 2015 OECD/INFE Toolkit for Measuring Finansial Literacy and Inclusion Source: G20/OECD INFE Report on Adult Financial Literacy in G20 Countries (2017) In this report, the result of the survey shows that Indonesia is above average, G20 countries (12,7) with total score of financial knowledge, attitude, and behavior = 13,4 5

6 The Trilogy of Policy Instruments As Indonesia has already had the Trilogy of Policy Instrument in Consumer Empowerment, namely the National Strategy for Financial Literacy, National Strategy for Financial Inclusion, and the Strategy for Financial Consumer Protection Launched by the Coordinating Ministry on Human Development and Culture on May, 2017 Launched by the President on Nov 2016 (revised version) Strategy for Financial Consumer Protection National Strategy for Financial Inclusion National Strategy for Financial Literacy Launched by the President on Nov 19,

7 Strategy and Regulation on Financial Literacy WHAT DO WE ALREADY HAVE? 1 Revised Indonesian National 2 Strategy for Financial Literacy (revised 2017) OJK regulation No.76/2016 on Raising Financial Literacy and Inclusion in the Financial Services Sector for Consumers and/or the Public Highly'financial' literate'population' who'thus'can'take'advantage'of'suitable'financial products'and'services'to'achieve'sustainable'financial'well:being' MISION Financial'Education Broadening'Access' to Financial Services STRATEGIC. PROGRAMS Financial' Competence Financial Wise' (Behavior'and'Attitude) Financial' Access INITIATIVE PROGRAMS Knowledge,'Skill,' and'confidence Infrastructure Financial'Goals'and' Planning Financial'Management' Ability To'Broaden'and'Ease' Financial'Access Availability'of'Financial' Products'and'Services based on PRESIDENT REGULATION No. 50/2017 about National Strategy on Consumer Protection FINANCIAL LITERACY INDEX TARGET: 35% ON

8 Revised National Strategy on Financial Literacy WHAT S NEW IN THE REVISED NATIONAL STRATEGY? Financial Well-being concept has been adopted in the vision of the revised National Strategy for Financial Literacy (deeper goal from previous national strategy). The goal is to reach: Highly financial literate population who thus can take advantage of suitable financial products and services to achieve sustainable financial well-being" We define financial well-being as the ability to: the ability to manage finances well the ability to develop assets, and having financial resilience 8

9 Revised National Strategy on Financial Literacy WHAT S NEW IN THE REVISED NATIONAL STRATEGY DEFINITION OF FINANCIAL LITERACY knowledge, skill, and confidence that affect attitude and behavior to improve the financial decision making and management in order to achieve financial well being. *) Knowledge Skill Confidence Attitude Behavior Improved approaches RESULTS More segments targeted Information regarding sharia financial literacy and inclusion Information regarding digital financial services Detailed indicators New pillars and action Financial planning 9

10 Revised National Strategy on Financial Literacy WHAT S NEW IN THE REVISED NATIONAL STRATEGY? National Strategy for Financial Literacy (2013) National Strategy for Financial Literacy (Revisit 2017) Vision Towards Indonesia s people with high financial literacy level (well-literate), having adequate skill and confidence to choosing and using financial products/ services for welfare improvement Highly financial literate population who thus can take advantage of suitable financial products and services to achieve sustainable financial wellbeing. Conceptual Framework 1 st Pillar Education and National Campaign 2 nd Pillar Strengthening Financial Literacy Infrastructure 3 rd Pillar Financial Products and Services Development Strategic Program 1 Financial competence Strategic Program 2 Financial-Wise Behavior and Attitude Strategic Program 3 Financial Access 10

11 Revised National Strategy on Financial Literacy WHAT S NEW IN THE REVISED NATIONAL STRATEGY? National Strategy for Financial Literacy (2013) National Strategy for Financial Literacy (Revisit 2017) Target Segmentation 1. Women (housewives) 2. MSMEs 3. Students/College students 4. Employees 5. Professionals 6. Retirees 1. Women 2. MSMEs 3. Students/College students & Youth 4. Employees 5. Professionals 6. Retirees 7. People with disabilities 8. Migrant workers / migrant workers candidates 9. Farmers & Fishermen 10. Remote and secluded communities Priority Themes Priority targets are determined annually: 2014 Women (housewives) & MSMEs 2015 Students/College students, Professionals 2016 Employees, Retirees 2017 Women (housewives) & MSMEs 2018 Students/College students, Professionals Priority themes will be set by Indonesia FSA in collaboration with financial services industry based on: a. Governments and Indonesia FSA programs b. Evaluation and similar needs on financial literacy and inclusion 11

12 Regulation on Financial Literacy OJK REGULATION No. 76/2013 on Raising Financial Literacy and Inclusion in the Financial Services Sector for Consumers and/or the Public REGULATED ENTITIES: FINANCIAL PROVIDERS 1. Commercial Banks 2. Rural Banks 3. Brokerage companies 4. Investment Management 5. Financial Institution Pension Fund 6. Insurance companies 7. Venture capital companies 8. Financing companies 9. (State-owned) Pawnshop 10. Guarantee companies FINANCIAL SERVICES PROVIDERS ARE OBLIGED: ü to have A FUNCTION OR UNIT TO IMPLEMENT, MONITOR, AND EVALUATE financial literacy and inclusion activities ü to MAKE AND SUBMIT financial literacy and inclusion activities plan ONCE A YEAR 12

13 Regulation on Financial Literacy OJK REGULATION No. 76/2013 on Raising Financial Literacy and Inclusion in the Financial Services Sector for Consumers and/or the Public FINANCIAL EDUCATION PROGRAM IMPLEMENTATION: Financial education with standardized content that includes: o Financial planning/management o Financial industry o Financial products and services features (i.e. benefits and risks, rights and obligations, how to access, and transaction mechanisms) o Taxes related to financial transaction Financial literacy infrastructure development to provide information system, human resource, and database. ü increasing the quality of financial decision making of individuals ü changing attitude and behavior of individuals for better financial management 13

14 Financial Literacy and Education Initiatives by Indonesia FSA in Financial Education Approaches Geographical approach Identify areas with low financial literacy levels and having limited access to financial information, products/services Target approach Women MSMEs Students/College students & Youth Professionals Employees Retirees Remote communities People with Disabilities Farmers & Fishermen Migrant Workers Sectoral approach Banking Non banking Financial Institutions Capital Market Thematic Approach Sharia Finance Rp Rp Rp Investment Alert (Ponzi scheme, etc.) 14

15 Financial Literacy and Education Initiatives by Indonesia FSA in Financial Literacy and Education Material Development Material for Formal Financial Education (Students and College Students) 2014 Financial Literacy Book For Senior High School 2014 Financial Literacy Book For Junior High School Financial Literacy Book for Elementary School Financial Literacy Book Series for College Students E-book version of Financial Literacy Book For Senior High School Board Game for Elementary School Included in the curriculum Material for Financial Education for Communities 2013 Book of Financial Planning for Family 2014 Financial Literacy Series Brochure and Booklets 2015 Booklet of Professions in Financial Sector, Poster, brochures on investment alert 2016 Braille version of Financial Planning Book 2017 Practical Books of Financial Literacy Series for Professionals and Retirees 15

16 Financial Literacy and Education Initiatives by Indonesia FSA in National Campaign Public Service Advertisement Journalist Interview Public Transportation Cinema, ATM Screen Billboard and Videotron Social Media Campaign Instagram Twitter Facebook 16

17 Financial Literacy and Education Initiatives by Indonesia FSA in Financial Education Infrastructures Formal Financial Education (Students and College Students) Education for Teachers/Educators in formal education program Financial Education using Financial Literacy Car (SIMOLEK) Financial Consumer Care (FCC) Financial Education Website and Mobile Application sikapiuangmu.ojk.go.id Mobile Application Sikapiuangmu 17

18 Financial Literacy and Education Initiatives by Indonesia FSA in Development of Financial Products and Services LAKU PANDAI / Branchless banking is the government s effort in supporting financial inclusion program which provide simple and easy-tounderstand financial products, and relevant with society s needs that have not been covered with financial services so far. The products provided: 1) Basic Saving Account (BSA), 2) Loans/financing for micro business customers, and 3) Other financial products such as micro insurance. Acceleration Team for Regional Financial Access (TPAKD) Coordination forum between related institutions and stakeholders to improve acceleration of regional financial inclusion in order to boost regional economic growth and also to achieve welfare. The members included: regional governments, representatives from central banks, Central Bureau of Statistics, financial industries association, academician, etc. Student Savings (SIMPEL) Saving for student that is nationally issued by Indonesian banks with easy and simple process, in order to educate student a good saving behaviour and include them in financial system fromthe earlystage. 18

19 Financial Education Implemented by Financial Industries in However, the implementation still needs more active involvement from all financial industries. WHO ARE THE TARGET OF FINANCIAL EDUCATION PROGRAMS BY FINANCIAL INDUSTRIES? 2016 Realization 2017 Realization Retirees 2,81% Retirees 5,81% College Students 8,67% College Students 6,98% Professionals Women (Housewives) MSMEs 8,60% 12,64% 20,52% Professionals Women (Housewives) MSMEs 8,14% 14,15% 21,32% Main target in 2016 Employees 23,26% Employees 18,22% Students 23,50% Students 25,39% Students (Elementary and High School) are still the main target for financial education conducted by financial industries Financial education for women need to be encouraged, primarily as vulnerable community groups with lowest financial literacy level in Indonesia. Source: OJK Financial Education and Consumer Protection Reporting System (SiPEDULI) 19

20 Financial Education Implemented by Financial Industries in However, the implementation still needs more active involvement from all financial industries. WHO TOPICS ARE DELIVERED? 2016 Realization 2017 Realization Entrepreneurship 3,31% Entrepreneurship 3,63% Others 4,19% Others 5,76% Rights and Obligations 12,02% Rights and Obligations 12,41% Financial Planning 13,13% Financial Planning 11,70% Benefits and risks 20,08% Benefits and risks 20,57% Intro to Financial Institutions Intro to Financial Products and Services 22,02% 25,22% Intro to Financial Institutions Intro to Financial Products and Services 21,37% 24,56% Most financial education are introducing financial institutions, products and services. When 2017 realization are compared to 2016 realization, there are slight increases financial education that teach the audience about rights and obligations as financial consumer. In the other hand, financial planning topics which is now mandatory in financial education material decreased by almost 1,5% Source: OJK Financial Education and Consumer Protection Reporting System (SiPEDULI) 20

21 q q q q To enhance the COORDINATION among stakeholders To develop strong financial literacy INFRASTRUCTURE To EVALUATE the impact and effectivity financial of education program To maintain the SUSTAINABILITY of the financial education program HOME WORK 21

22 ANNEX The result and follow up of the national survey Why we revise the strategy? Financial education program implemented by financial industries 22

23 Result of National Survey on Financial Literacy and Inclusion (2016) INDONESIA THE GEOGRAPHICAL COVERAGE AND RESPONDENTS PROFILING AGE y.o y.o y.o y.o > 50 y.o GENDER Man Woman JOB Entrepreneur Employee and Professional Student Housewife Pensions Unemployed and others REGION Rural Urban EDUCATION Have no formal education/ Not graduated from primary school Primary School Graduate Secondary School Graduate High School Graduate College or University Graduate EXPENDITURE A Class B Class C Class D Class E Class 9680 RESPONDENTS 34 PROVINCES 64 CITIES 7 1 city 24 2 cities 3 3 cities measuring financial literacy and inclusion in 6 financial industries: banking, capital market, insurance, financing institution, pension fund, and pawnshop 23

24 Result of National Survey on Financial Literacy and Inclusion (2016) INDONESIA SHARIA FINANCE NATIONAL SHARIA FINANCIAL LITERACY INDEX 8,11% NATIONAL SHARIA FINANCIAL INCLUSION INDEX Pension Fund Capital Market Financing Pawnshop Insurance 0,00% 0,00% 0,02% 0,01% 0,19% 0,24% 1,63% 0,71% 2,51% 1,92% Banking 6,63% 9,61% 11,6% 0,00% 5,00% 10,00% 15,00% 20,00% Financial Literacy Financial Inclusion *) α =5% Source: OJK, respondents; age > 15 y.o.; 34 provinces; measuring financial literacy and inclusion in 6 financial industries: banking, capital market, insurance, financing institution, pension fund, and pawnshop 24

25 Result of National Survey on Financial Literacy and Inclusion (2016) INDONESIA FINANCIAL LITERACY AND INCLUSION LEVEL TINGKAT Literacy KEUANGAN MENURUT KELOMPOK PEKERJAAN FINANCIAL LITERACY LEVEL BY GENDER Entrepreneur 29.43% Employee 39.89% Students/College Students Housewives 15.12% 23.52% Retirees 36.00% Others 21.16% FINANCIAL INCLUSION LEVEL BY GENDER 33% 26% 70% 66% *) α =5% Source: OJK, respondents; age > 15 y.o.; 34 provinces; measuring financial literacy and inclusion in 6 financial industries: banking, capital market, insurance, financing institution, pension fund, and pawnshop 25

26 Result of National Survey on Financial Literacy and Inclusion (2016) DATA RESULT OF OECD QUESTIONNAIRE using 2015 OECD/INFE Toolkit for Measuring Finansial Literacy and Inclusion Financial Knowledge Financial Attitude Financial Behavior Financial education must be designed to take into account the significant differences in knowledge, and should also target the change of behavior. 26

27 Revised National Strategy on Financial Literacy WHY DO WE REVISE THE STRATEGY? PRESIDENT REGULATION No. 82/2016 about National Strategy on Financial Inclusion Financial education and inclusion activities that need to be optimized More complex financial products/services The development of information technology as an opportunity to improve financial literacy Broader definition of financial literacy with attitude and behavior aspects Indonesia National Financial Literacy and Inclusion Survey 2016 WHAT ARE THE OBJECTIVES IN REVISING THE STRATEGY? To improve the Indonesia National Strategy for Financial Literacy (2013) To accomodate any changes and development in financial literacy and inclusion To accelerate the achievement of financial literacy and inclusion target 27

28 Revised National Strategy on Financial Literacy WHAT S NEW IN THE REVISED NATIONAL STRATEGY More segments targeted Women Professionals Students/College students & Youth People with Disabilities MSMEs Remote communities Retirees Migrant Workers Employees Farmers & Fishermen 28

29 Revised National Strategy on Financial Literacy WHAT S NEW IN THE REVISED NATIONAL STRATEGY Detailed indicators INITIATIVE PROGRAM Initiative Program, elaboration of strategic programs CORE ACTION Core action, implementation of each initiative program KEY INDICATORS OUTCOMES Key Indicators, measure of core action implementation both qualitatively and quantitatively Outcomes, Final result to be achieved from core action 29

30 Revised National Strategy on Financial Literacy WHAT S NEW IN THE REVISED NATIONAL STRATEGY New pillars and action Highly'financial' literate'population' who'thus'can'take'advantage'of'suitable'financial products'and'services' to'achieve' sustainable'financial' well:being' MISION Financial'Education Broadening'Access' to Financial Services STRATEGIC. PROGRAMS Financial' Competence Financial Wise' (Behavior'and'Attitude) Financial' Access INITIATIVE PROGRAMS Knowledge,'Skill,' and'confidence Infrastructure Financial'Goals'and' Planning Financial'Management' Ability To'Broaden'and'Ease' Financial'Access Availability'of'Financial' Products'and'Services 30

31 Revised National Strategy on Financial Literacy WHAT S NEW IN THE REVISED NATIONAL STRATEGY New pillars and action STRATEGIC PROGRAM 1 FINANCIAL COMPETENCE Initiative program 1.1 Increase public knowledge, skill, and confidence in the financial services sector Initiative program 1.2 Develop infrastructure to increase knowledge, skill, and confidence in the financial services sector STRATEGIC PROGRAM 2 FINANCIAL WISE (BEHAVIOR AND ATTITUDE) Initiative program 2.1 Encourage people to have financial goals and financial planning Initiative program 2.2 Enhance the skill of financial management STRATEGIC PROGRAM 3 FINANCIAL ACCESS Initiative program 3.1 Broaden and ease public access to financial services sector Initiative program 3.2 Provide financial products and services that suit the public needs and capabilities 31

32 Strategy and Regulation on Financial Literacy THE NATIONAL SURVEY RESULTS FOLLOW UP The results of the National Financial Literacy and Inclusion Survey 2016 become one of our basis in revising the National Strategy for Financial Literacy and to reinforce the new Strategy for Financial Consumer Protection. EVALUATION AND SURVEY Evaluation of the existing implementation of the national strategy (conducted by OJK and financial industries) National Financial Literacy and Inclusion Survey The detailed results of the national survey has enriched our perspectives, that: ü Financial literacy index has raised by 7,9% by implementing actions defined in previous national strategy. ü Adjustment to previous action plans is needed due to broadened aspects of financial literacy to achieve and be measured ü The efforts to improve financial competencies, behavior, and attitude are need to be done in different approaches 32

33 Regulation on Financial Literacy OJK REGULATION No. 76/2013 on Raising Financial Literacy and Inclusion in the Financial Services Sector for Consumers and/or the Public OBJECTIVES OF FINANCIAL LITERACY PROGRAM increasing the quality of financial decision making of individuals changing attitude and behavior of individuals for better financial management to make them capable of determining and utilizing financial institutions, products and services that suit the needs and capabilities of the consumer and society in order to achieve prosperity. SCOPES AND PRINCIPLES SCOPES planning and implementation of financial education development of supportive financial literacy infrastructure PRINCIPLES 1. Planned and measurable 2. Outcome oriented 3. Sustainable 4. Collaboration 33

34 Regulation on Financial Literacy OJK REGULATION No. 76/2013 on Raising Financial Literacy and Inclusion in the Financial Services Sector for Consumers and/or the Public PLANNING AND IMPLEMENTATION Financial education with standardized content that includes: o Financial planning/management o Financial industry o Financial products and services features (i.e. benefits and risks, rights and obligations, how to access, and transaction mechanisms) o Taxes related to financial transaction Financial literacy infrastructure development to provide information system, human resource, and database. COMMITMENT o BOARD OF DIRECTORS ARE OBLIGED to MAKE AND SUBMIT financial literacy and inclusion activities plan. o BOARD OF COMMISSIONERS ENSURE that the Board of Directors have and implement the financial literacy and inclusion activities plan. o BOARD OF DIRECTORS ARE OBLIGED to IMPLEMENT financial literacy and inclusion activities plan. o FINANCIAL PROVIDERS ARE OBLIGED to havea FUNCTION OR UNIT TO IMPLEMENT, MONITOR, AND EVALUATE financial literacy and inclusion activities. 34