The Application Of The P2SK Law Increases Community Financial Literacy

Head of the Financial Sector Policy Center of the Fiscal Policy Agency of the Ministry of Finance Adi Budiarso. (Photo: Doc. Antara)

Head of the Financial Sector Policy Center of the Fiscal Policy Agency of the Ministry of Finance Adi Budiarso said the implementation of the Financial Sector Development and Strengthening Law (UU P2SK) could increase public financial literacy which had only reached 49.68 percent.

"The literacy in the capital market sector is still below the literacy of the banking sector, especially insurance literacy and pension funds, there are still many people who are not aware of the importance of saving and protection in old age," he said as quoted by Antara, Tuesday, February 14.

Currently, people's savings in various instruments such as banking, capital markets, insurance, and pension funds only reached about 7 percent of Gross Domestic Product (GDP) or lower than people's savings in Malaysia which reached 60 percent of GDP.

The Indonesian financial sector still has the potential to be deepened to be used as an investment that will support economic growth.

He said that in the future people's savings needs to be enlarged from 3 percent from take home pay to 15 percent.

"It's our insurance and pension power to encourage solid and sustainable financial sector strengthening in order to create sustainable welfare, protection, job creation, and financing," he said.

At the same time, various problems in the financial sector, such as high financial transaction costs, Micro, Small and Medium Enterprises (MSMEs) access financing, and limited financial instruments, especially for high-income people, need to be overcome.

In addition, financial literacy of 49.68 percent or away from financial inclusion of 85.10 percent also needs to be increased to 90 percent by 2045.

With the range between literacy and inclusion, there is adequate policy making without literacy. This means that our society is exposed to risks so that we must work together to encourage the literacy index so that it can be the same as financial inclusion," he said.