President Jokowi Instructs Indonesia’s Banking Industry To Break Out of Comfort Zone

Executives of Indonesia’s banks in a meeting with President Jokowi, at the State Palace, Jakarta, on Thursday (15/3) (Photo by: Oji/Public Relations Division)

President Joko “Jokowi” Widodo was quite impressed with reports from Financial Services Authority (OJK) Chairman Wimboh Santoso that capital adequacy ratio (CAR) of Indonesia’s national banks reaches 23.36 percent.

“It is such a high figure. To my knowledge, CAR in developed countries only reaches 12 to 15 percent, while Indonesia’s reaches 23.36 percent as the Chairman of OJK has mentioned before,” President Jokowi said in a meeting with the Executives of Indonesia’s banks, at the State Palace, Jakarta, on Thursday (15/3).

In addition to that, excess reserve at Indonesia’s national banks amounted to Rp626 trillion, which indicates our banks are very liquid.

However, the President wondered if Indonesia’s national banks are considered oversecure because the figure is really high. In other words, whether this could mean the leaders of banking industry did not take any risk due to the high figure.

On that occasion, President Jokowi said that considering the uneven spread of CAR, Indonesia’s national banking should have ideas to make financial sector more aggressive, and break out of the comfort zone given that conditions are needed by our economy.

“The 12 percent (in credit distribution, red) target set this year would not be met if we are still stuck in the comfort zone. But, once again, banking should be prudent,” President Jokowi added.

Alhough all banks want to earn huge profit, the President instructed all financial services providers to not stay in their safe zones. He reminded all that spirit of startup business, tourism sector or lifestyle should be anticipated by banking industry.

“Banking industry must be proactive in supporting small and medium-sized enterprises (UKM) to move the business to digital platform. Guide them, inspire them to move to digital platform,” the President firmly said.

President Jokowi also gave tasks to the executives of banking industry about student loan in which in the US, the total student loan surpassed outstanding credit card debt.

“I was shocked knowing this fact. The total credit card debt in the US reaches US$800 billion, while the total of student loan debt reaches US$1.3 trillion,” the President said expressing his disbelief that there is no student loan in Indonesia.

President Jokowi hopes student loan can be a new financial product promoted by banking and insurance industries.

“Thus, take the potentials and innovations in our consideration because if we do not take the opportunity and make innovation, someone else will do it, eventually,” the President concluded.

Joining the event were Coordinating Minister for the Economy Darmin Nasution, Minister of Finance Sri Mulyani Indrawati, Minister of State Secretary Pratikno, Presidential Chief of Staff Moeldoko, Chairman of OJK Wimboh Santoso, and the representatives of banking industries in Indonesia. (FID/OJI/ES) (RAS/MUR/MMB/Naster)