OJK Says Middle Eastern Investor Ownership is Relatively Limited

OJK (photo: dock. Antara)

JAKARTA - The Financial Services Authority (OJK) noted that until February 2024, direct exposure of Financial Services Institutions (LJK) to the Middle East Region is relatively limited.

Meanwhile, securities with issuers from the Middle East owned by domestic banks only amount to IDR 1.3 trillion or 0.06 percent of the total securities owned by banks, while insurance and financing companies do not have securities with issuers from the Middle East.

Meanwhile, on the stock market, the value of share ownership of investors from the Middle East was recorded at IDR 65.73 trillion or around 2 percent of the total value of share ownership of non-resident investors.

Head of the Literacy, Financial Inclusion, and Communication Department, Aman Santosa, said that LJK (controlling) ownership by investors in the Middle East is recorded only in banking with an asset share of 0.1 percent of total banking assets.

Aman said that his party assesses that the stability of the national financial services sector is maintained, supported by strong capital, adequate liquidity and a manageable risk profile so that it is able to face increasing global geopolitical tensions.

"OJK will pay close attention to the latest developments in the Middle East and their impact on intermediation performance and stability of the national financial system in the future," he explained in his statement, quoted Thursday, April 18.

In the midst of increasing uncertainty, Aman said that the OJK assesses that the fundamentals of the Indonesian economy are well maintained, as seen from growth that is maintained at around 5 percent, inflation that is within Bank Indonesia's target range, a trade balance that is still recording a surplus, adequate foreign exchange reserves, and still available fiscal space.

Aman said that in the future, the buffer to maintain financial system stability amidst potential escalation of conflict in the Middle East is considered to still be quite adequate.

According to Aman, this is of course, considering the condition of the highest capital levels in the region, the exchange rate risk is quite controlled as can be seen from the daily banking net foreign exchange position (PDN) at the beginning of April 2024 which is far below the threshold (1.67 percent with a threshold of 20 percent ), as well as liquidity in rupiah and foreign currency which is still ample.

However, the OJK will continue to monitor market risk developments in Financial Services Institutions and pay close attention to financing to sectors that have high exposure to conflict in the Middle East, including paying close attention to the conditions of individual LJKs.

Aman said that OJK had asked LJK to always carry out evaluations regarding the potential transmission impact of global and domestic economic developments on its portfolio and take the necessary mitigation steps.

"OJK continues to coordinate with KSSK members and is committed to issuing the necessary policies in a timely manner," he concluded.