Indonesia unveils five pillars of financial sector reform
Jakarta (VNA)
- The reformation of Indonesia’s financial sector through the implementation of
the Law on Financial Sector Development and Strengthening (UU P2SK) will be
based on five pillars, Vice Minister of Finance Suahasil Nazara has said.
The first two pillars are strengthening public trust in
financial service institutions, and the development of digital financial sector
and its innovation, he said in a
statement released on February 23.
The third involves
efforts to promote long-term fund accumulation, while the fourth pillar is the state
protection of financial product consumers and the last is financial sector literacy
and inclusion.
According to Sartono,
managing partner of Hanafiah Ponggawa & Partners (Dentons HPRP), the UU P2SK is expected to bring
larger opportunities for adopting Environmental Social Governance (ESG) in the
financial sector.
“The UU P2SK is expected to strengthen the
governance of the financial sector and to improve public trust to achieve
welfare and consumer protection,” Sartono was quoted by Antara news agency as
saying.
Meanwhile, a senior executive analyst at the
Financial Services Authority (OJK), Greta Joice Siahaan, said OJK’s priorities
in financial sector reform are the spin-off policy and the consolidation of bank
sharia units and insurance companies.
According to her, the reform priorities include
implementing UU P2SK by 2028 and strengthening market conduct supervisory. UU
P2SK also has a new mandate, namely to regulate cooperatives, digital financial
assets and crypto assets.
Vice chairwoman of the Indonesian Chamber of Commerce and
Industry (Kadin) Shinta Kamdani said that the implementation of ESG is
inevitable as business profits no longer solely rely on financial profits and
performance.
According to her, investors see ESG as a key
factor that reduces the risks of investment, along with increased awareness on
climate change, human rights, and transparency of consumer protection./.