Warning From OJK: PPKM Potentially Affects Economic Rate In The Rest Of 2021

Illustration (Photo: Doc. Antara)

JAKARTA - Deputy Commissioner for Public Relations of the Financial Services Authority (OJK) Anto Prabowo said that until the first semester of 2021, the financial services sector remained stable, as reflected in the improvement in a number of indicators. According to him, banking intermediation and fund raising in the capital market are still at a maintained level.

However, Anto believes that financial services industry players must pay close attention to the current situation while still applying the principle of prudence.

"The OJK is observing a decline in mobility due to the implementation of the Emergency PPKM, which is feared to affect the pace of economic recovery in the future," he said in an official statement after the Board of Commissioners' Meeting (RDK), Thursday, July 29.

According to Anton, the authorities support the government's program to accelerate community vaccination by opening COVID-19 vaccine centers in various regions in collaboration with the Financial Services Industry and the Ministry of Health with a target of 10 million vaccines by December.

"Acceleration of vaccination is believed to be the main key to building communal immunity so that people's mobility can return to normal and the economy can move again," he said.

Anto added that the global economic recovery is still continuing, especially in the world's major economies, along with vaccination rates and mobility that have started to return to pre-pandemic levels.

"The monetary policies of the world's major countries are expected to remain accommodative so as to reduce liquidity risk in global financial markets," he said.

For information, until the first half of 2021, the OJK reports that the domestic financial services sector is still relatively stable.

This is shown by the JCI until July 23, 2021, which recorded an increase to the level of 6,102 or grew 1.9 percent month to date (mtd) with non-resident funds flowing in at Rp. 2.02 trillion.

The SBN market was also observed to strengthen with the average SBN yield dropping 13.5 bps across all tenors. However, non-resident investors recorded a net sell of IDR 11.73 trillion.

Fundraising in the capital market until July 27, 2021 has reached a value of IDR 116.6 trillion, an increase of 211 percent from the same period last year, with 27 new issuers conducting IPOs.

In addition, there are still public offerings in process from 86 issuers with a nominal value of Rp54.2 trillion.

Meanwhile, for banking credit, until June 2021, it will increase by Rp. 67.39 trillion and has grown by 0.59 percent year on year (yoy), continuing the trend of improvement over the last four months in line with various stimuli.

Then, the risk profile of financial services institutions in June 2021 was still relatively well maintained with a gross NPL ratio of 3.24 percent (net NPL: 1.06 percent) and a finance company's NPF ratio in June 2021 falling to 3.96 percent (May 2021: 4 ,05 percent).

Then, the Risk-Based Capital of the life insurance and general insurance industries was recorded at 647.7 percent and 314.8 percent, respectively, well above the regulatory threshold of 120 percent.

Likewise, the gearing ratio of finance companies was recorded at 2.03 times, far below the maximum limit of 10 times.

"The OJK continuously conducts assessments of the financial services sector and the economy to maintain the momentum of accelerating the national economic recovery in the midst of increasing domestic COVID-19 cases and continuing to strengthen synergies with stakeholders in order to maintain financial system stability," he concluded.