JAKARTA - The government through the Ministry of Finance said that one of the main causes of the investment funding gap is the proportion of assets in the financial sector which is not even enough.
Minister of Finance (Menkeu) Sri Mulyani said that the banking sector as a source of short-term financing is still very dominant compared to other sectors.
According to him, the portion of assets in the non-bank financial industry, such as insurance and pension funds which function as long-term sources of funds to support development financing, is relatively small.
The portion of assets in the non-bank financial industry as a long-term source of funds that can be expected to provide sources of development financing is relatively small. This condition indicates that the collection of public funds by the financial industry is still very limited and the potential for market deepening means that it is still very large," he said in a written statement on Friday, November 11.
The Minister of Finance explained that on the other hand, in the midst of banking dominance, the functions carried out by banks to support the economy are also not optimal. The operational costs of Indonesian banking are still relatively high compared to ASEAN countries.
This can be seen from the high profit of the difference in loan and savings interest (net interest margin) which has an impact on the high level of loan interest rates.
In terms of the amount of savings in the bank, there is inequality because the number of large customers is still small, but the amount of savings dominates third party funds in the banking sector. On the other hand, small customers are very dominant in terms of account numbers, but very small in terms of total savings," he said.
The Minister of Finance added that the Indonesian stock market financial market is also relatively lagging behind other countries in the ASEAN region.
The same thing happened in the bond market, where the percentage of Indonesia's bond capitalization against GDP was still far behind other emerging countries.
In addition, the mechanism of protection against risks through the availability of varying financial instruments for risk management for complicated financial activities and transactions (sophasticated) and high risk is relatively limited.
The limited financial instruments are closely related to limitations in terms of the availability of financial instruments for investment and risk management. The new domestic financial instruments include savings, demand deposits, mutual funds, stocks, bonds and derivative products that are still limited," he said.
At the same time, the emergence of sophisticated financial instruments such as crypto assets, gains a fairly high interest from the public and is used as an alternative in investing.
Therefore, it is necessary to build a fairly strong and reliable investor control and protection mechanism for high risk investment like this. So the Draft Law on the Development and Strengthening of the Financial Sector (RUU PPSK) is very important to support economic development," closed the Minister of Finance Sri Mulyani.
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