Sri Mulyani: Financial Sector Reform is the Main Requirement for a Just Indonesian Economy

Minister of Finance Sri Mulyani Indrawati. (Photo: Doc. Antara)

JAKARTA - Minister of Finance Sri Mulyani Indrawati stated that steps to reform the financial sector are the main requirement for building a dynamic, strong, independent, sustainable, and just Indonesian economy.

"Reform of Indonesia's financial sector is a major prerequisite", she said at the 13th Indonesia House of Representative Plenary Session for Session Period II for Session Year 2022-2023 in Jakarta, quoted from Antara, Thursday, December 15.

Sri Mulyani said there are 17 laws (UU) related to the financial sector that has been in effect for quite a long time and some have even been more than 30 years old, so they need to be adjusted to the dynamics of changing times.

In addition, she explained the current conditions and challenges as well as added to the urgency of Indonesia's financial sector reforms such as the still shallow domestic financial sector, especially the low public savings in the form of pension funds and insurance.

In addition, Indonesia's financial sector assets are still dominated by short-term funding sources, namely the banking sector.

Then, the interest rate on domestic loans is still relatively high compared to countries in the region, resulting in a high-cost economy.

Reform must also be carried out because aspects of governance and law enforcement in Indonesia's financial sector still need to be improved.

Next, the inclusive financial index in Indonesia still needs to be improved, due to technological disruption, especially digital technology such as financial technology (FinTech) and the relatively slow growth of human resources (HR) supporting the financial sector.

According to Sri Mulyani, these various things show the inability of the national financial sector to meet the needs of a large economy independently.

"Especially when it is linked to our shared dream of achieving the vision of Indonesia Gold in 2045", emphasized Sri Mulyani.

Therefore, the government is carrying out financial reforms, one of which is through the Draft Law on the Development and Strengthening of the Financial Sector (RUU P2SK).

"We believe that our efforts will bring the P2SK Bill to achieve its goal of reforming Indonesia's financial sector for the sake of a more prosperous nation's future", she said.