Indonesia unveils five pillars of financial sector reform

Indonesia's Vice Minister of Finance Suahasil Nazara (Photo: ANTARA)

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./.