REPUBLIKA.CO.ID, JAKARTA -- Financial technology (fintech) is expected to be a solution to the challenges faced by the financial system in the country, National Development Planning Board (Bappenas) Head Bambang Brodjonegoro stated during a workshop here, Wednesday.
"We view fintech as one of the strategic elements for realizing financial inclusion and creating equitable development for the poor and vulnerable, who are unable to access formal financial services," he noted.
In 2016, the Indonesian FinTech Association recorded that the country had at least 140 fintech players.
With the increase in financial literacy in Indonesia, long-term investment and capital placement in various productive sectors are also expected to rise.
The three development priorities that can be mobilized by utilizing fintech are firstly, capital mobilization to improve the economic activities of low-income communities as well as small and medium enterprises.
The second priority focuses on mobilizing the people's money to finance basic infrastructure, such as sanitation and electricity.
The last priority aims to mobilize funds to support the development of sustainable infrastructure, such as clean energy, as well as to finance strategic innovations to increase agricultural and fishery products.
Bappenas has forecast that investment financing for infrastructure construction in 2018 will reach Rp5,248 trillion, with 62 percent of the financing coming from the community due to the limited fiscal capacity.
"We think fintech has the capability to fill the gap in such a huge potential market, so it can help to improve the welfare of poor households through business financing, access to clean water and electricity, as well as financial management for health and education," Brodjonegoro explained.
In the National Mid-Term Development Plan (RPJMN) of 2015-2019, inclusive financing has become the government's focus to achieve economic independence by driving strategic sectors of the domestic economy.
The goal is to increase public access to formal financial services within an inclusive and equitable economic development framework.
According to a survey conducted by Deloitte Consulting and Indonesian FinTech Association in 2016, clearer regulations, collaboration, and financial literacy have become the three key elements to encourage the implementation of fintech in Indonesia.
In 2016, the country's financial literacy index was recorded at 29.66 percent, with the financial inclusion index of 67.82 percent.
The government continues to make efforts for realizing the financial inclusion index target of 75 percent by 2019.
However, the Financial Services Authority recorded that only 67 percent of the adults in 2016 had access to formal financial institutions.
Meanwhile, data from the Central Bureau of Statistics revealed a new credit share of 35.5 percent of the gross domestic product.
"Hence, policies that are adaptive to technology as well as partnership with private parties and financial services are needed to be able to positively contribute to achieve the target of RPJMN," Brodjonegoro noted.
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