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Our Economy is Not Affected Too Much by Global Situation: OJK Chairman

Editor

Laila Afifa

1 April 2023 12:07 WIB

Albeit the current global condition?

Yes, we’ve calculated that. First, how it is transmitted from international to domestic. It is transmitted first through trade and investment. Especially for trade, compared with other ASEAN countries, Indonesia is not too exposed to international trade. Our trade to GDP (gross domestic product) ratio is 50 percent max, whereas Singapore’s is 300 percent, Malaysia's 170 percent, Vietnam's and Thailand's 130 percent. So, whatever happens in the international trade arena immediately affects their economies. Meaning our global supply chain is not extremely integrated like theirs. The bottom line is that we are not too dependent on external conditions. Our domestic market is also massive and already effective, not to mention an incredible development potential.

How is the condition of our financial sector? Is there a significant change from last year’s?

As we informed at the annual financial services industry meeting in the first week of February, bank credit grew 10 to 12 percent. That’s the numbers in January and February. So, we hit 11.3 percent, not just last year but also this year. It’s higher than those of the pandemic or even the pre-pandemic times. The average growth of our credit from 2014 to 2019 was around 8 percent.

What’s the cause?

First, we’ve more than recovered from the pandemic. Second, the increasing integrated-ness of the financial sector and economic development and growth, increased inclusion and access. Also, better utilization of financial services in all sectors, be it in corporations, commerce, micro and small businesses, or the public at large. 

The pandemic has no effect?

The pandemic helped certain sectors particularly fintech (financial technology). That’s for sure. But it’s the opposite for corporations. Some elements were driven by the pandemic but after the pandemic was over, they got better or they came out stronger. I thought perhaps we were indeed headed towards a sustained and higher growth rate from around 8 percent to around 10 to 12 percent.

The same holds true for non-bank financing particularly multi-finance companies that also expanded 14 percent in the first two months like last year. Then growth in insurance premium income, particularly from general and reinsurances, in the first two months is the same as last year’s. Unsurprisingly, life insurance premium income has contracted. Nevertheless, as a bit of solace, the contraction in the early months of this year is lower than last year’s. But there is still contraction.

Because of the cases such as Jiwasraya and AJB Bumiputera?

Because of (the decline in) trust and also integrity issues. They need to be fixed.

Read the Full Interview in Tempo English Magazine



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