Financial Literacy And Financial Inclusion Are The Key To Indonesia's Economic Growth

JAKARTA – PT BRI Investment Management is encouraging increased financial literacy by holding the 2023 Investment Specialist Forum (ISF) event on October 12 2023 at The Langham, Jakarta.

The Board of Commissioners of the Financial Services Authority (OJK), Friderica Widyasari Dewi, said that the 2023 Investment Specialist Forum (ISF) is expected to help increase financial literacy for investors and potential investors in Indonesia.

Based on the 2022 National Financial Literacy and Inclusion (SNLIK) survey, the financial literacy index of Indonesian society is 49.68 percent and this year's financial inclusion index reached 85.10 percent.

"If we look at this indicator, there is still a gap between financial literacy and inclusion and simultaneously continue to increase the financial literacy index to narrow the gap between the two indices," she said in his official statement, Monday, October 16.

Frederica said, this is homework for all of us, including all investment specialists, to always support increasing financial literacy and reducing the gap index between literacy and financial inclusion in Indonesia.

So that people not only get access to financial services, but also gain better knowledge or confidence about the institutions and financial products that people use.

Meanwhile, Head of BRI-MI's Partnership Distribution Division, Edward Narodo, said that ISF is an annual activity carried out by BRI-MI with the aim of providing information regarding future economic conditions and investment climate for all investors, distribution agents, and investment specialists.

"Our hope is that through ISF, BRI-MI will always be a friend of investment, literacy, and a source of information for all investors. "Wait for us at next year's ISF event which will be even more lively," said Edo.

Indonesia's Macroeconomic Projections Ahead of the Political Year

Helmy Kristanto, Chief Economist of PT BRI Danareksa Sekuritas, said that entering the second semester of 2023 and approaching the political year, macroeconomic performance in Indonesia is still in a fairly good position compared to other developing countries.

The government's fiscal surplus was at +0.7 percent of GDP at the end of August.

This provides sufficient space for the government to provide stimulus in the fourth quarter of 2023.

Even though the rupiah depreciated -0.8 percent year to date (YTD) as of October 11, the rupiah still outperforms other ASEAN currencies, such as the Philippine Peso, Thai Bhat, Malaysian Ringgit.

Furthermore, as the date for the nomination of presidential candidates & vice presidential candidates on October 19 approaches, election activities in society will increase and provide a positive impetus for economic growth in the fourth quarter of 2023.

Helmy said that the disinflation trend and more and more Central Banks choosing not to raise interest rates continues, so the main attention will be focused on economic growth.

From the domestic side, it is estimated that Bank Indonesia will maintain interest rates until the end of this year.

In addition, the election period will provide support for domestic consumption, which historically tends to have a positive impact on the stock market with the influx of foreign investors.

“Foreign capital inflows typically increase during election years, a trend that is expected to return next year. However, the impact on financial markets has become less pronounced due to global volatility, as was seen during the 2019 elections. Therefore, continued efforts to stimulate domestic growth and attract capital inflow, both in the form of portfolio and direct investment, will remain crucial in 2024.” he said.

In line with Helmy, from a political observer, Yunarto Wijaya, Executive Director of Charta Politika, said that the 2024 election has the opportunity to increase the stimulus for economic growth and aggregate consumption in Indonesia.

"We see that the General Election year in 2024 can support the stimulus for economic growth and aggregate consumption in Indonesia, this is considering that next year's general election will not only be for the election of President and Vice President which is likely to occur in 2 rounds, but also the general election "Legislative and Regional Head General Elections, which is the first time all of this will be held simultaneously for the 2024-2029 period," he said.

Indonesia's Valuation and Yields Still Attractive

BRI-MI Chief Investment Officer (CIO), Herman Tjahjadi, said that in terms of valuation and returns, the second Indonesian stock market and bond market are still relatively attractive considering that Indonesia is still in the mid business cycle with GDP growth of 5 percent in 2023 and 2024 next year, and rupiah volatility is maintained.

Herman said that the main risks that must be monitored intensively are oil prices and geopolitical risks in the Middle East.