Transcript Folie 1 - WordPress.com

Creating Inclusive Financial Services for Economic
Growth and Poverty Reduction in Indonesia
Presented at the 1st International Islamic Financial Inclusion Summit
Solo, July 17th, 2012
P.S. Srinivas, Lead Financial Economist
Financial and Private Sector Development Unit
World Bank Jakarta Office
1
Outline of Presentation:
1.
2.
3.
4.
Financial Inclusion contributes to
poverty reduction
Indonesia’s relative position on
Financial Inclusion
World Bank’s engagements related to
Financial Inclusion in Indonesia
How Islamic Finance links to Financial
Inclusion
2
What is Financial Inclusion ?
How does it contribute to economic growth and poverty reduction?
3
How does Financial Inclusion relate to poverty reduction?
Poverty Reduction
Social inclusion
Financial inclusion
(Access to Basic Services )
Promote empowerment
among the poor
(e.g., Health & Education,
Social mobilization)
(Access to Finance)
Expand the financial
capacity of the poor
Economic inclusion
Increase access to the
income generating
opportunities for the poor
(e.g., MSME development)
Without inclusive financial systems, poor individuals and small enterprises will have to rely on
their personal wealth or internal resources to invest in their education, become entrepreneurs or
take advantage of promising growing opportunities
4
Importance of Financial Inclusion for Poverty Reduction
Financial
Inclusion
Poorest
(Cluster 1)
Financial
Inclusion
Poor
(Cluster 3)
Poorer
(Cluster 2)
with sources of
income
with limited
assets
•PKH (CCT program)
•Scholarship & school
operational assistance
Escape from
poverty
almost graduate
(still vulnerable)
Financial
Inclusion
NEEDS:
•Asset Building
•Entry point for Formal
Financial Services
(saving)
•Asset Building & business start
up
•Start Accessing Broader Formal
Financial Services ( Saving,
Credit, remittance etc)
•Financial management &
Planning Skills
•Asset & income expansion
•Regular Access to Formal
Services
•Asset/life protection
(insurance)
•Jamkesmas (health assistance)
•Raskin (rice assistance)
• KUR Program
(partial guaranteed
credit)
• KUBE program
(joint business
group program for
productive poor)
i.e. PNPM Program:
• Mandiri Rural-Urban, Revolving Loan
Fund (RLF)
• PISEW (regional infrastructure
development)
• P2DTK (enhancing the development
of underdeveloped region)
5
Financial Inclusion goes beyond credit / microcredit
Deposit
Mutual
Fund/Stock
Credit
Financial
Inclusion
Income
generating
activities
Payment
System
Leasing
Bonds
Risk
mitigation
Insurance
Pension
Transactions & Technological Support
Asset
Building
Financial Education/Entrepreneurship
Saving
Financial inclusion is four dimensional
• Increase in
Financial
Penetration
• Stability &
improvement to
family, business,
& economy
• Regularity &
duration of use
1.Access
2.Usage
4.Welfare
3.Quality
• Meet the needs
of consumer
7
Financial Inclusion in Indonesia:
Where are we? What is happening?
8
Indonesia’s access to finance is behind other emerging economies
Bank Deposit Bank Loan
Value
Value
(% of GDP) (% of GDP)
Singapore
143
Malaysia
106
117
10
94
Philippines
53
28
Brazil
48
29
Indonesia
36
27
Russia
35
Pakistan
30
21
Mexico
21
16
Bank Branches
per 1000
sq km
Bank Branches
per 100,000
adults
613
10
16
14
8
49
59
6
8
6
12
15
6
33
15
30
121
13
20
12
0
9
3,493
56
2
8
ATM per
1,000
sq km
ATM per
100,000
adults
128 9
4
6
47
19
Source: IMF FAS 2011, data as 2010
9
Formal financial sector is dominated by banks, and the
poor segment is excluded from access to finance
Access to Financial Services in Indonesia
(All sample)
Financially Served - 83 %
Using Formal - 52 %
Underserved
49
0%
20%
Bank
Formal Other
3
40%
31
17
60%
80%
Informal & Semi-formal
100%
Underserved
Access to Financial Services in Indonesia
(Poor Households)
Financially Served - 61 %
Using Formal - 21 %
Underserved
19
0%
2
20%
Bank
Formal Other
40
40%
39
60%
Informal & Semi-formal
80%
100%
Underserved
Source: World Bank Study, Improving Access to Financial Services in Indonesia
2010
10
The poor have much less access to formal financial
services (Savings slightly better than credit but still limited)
Nationwide Access to Finance
Overlap Usages of Saving Instruments
Access to Savings in Indonesia
(All sample)
Formal Non-Bank
Banks
2.6%
Financially Served - 68 %
1.2%
7.5%
Using Formal - 44 %
1.9%
Underserved
16.6%
41
20%
3
18
6
32
18.2%
No Saving
31.9 %
Informal
0%
20%
Bank
40%
Formal others
Informal
60%
80%
Other's accounts
100%
Underserved
The Poor's Access to Savings
(Represents 13% of total HHs)
Financially Served - 40 %
Using Formal - 14 %
12
0%
2
21
20%
Bank
Underserved
5
60
40%
Formal others
Source: World Bank Study, Improving Access to Financial Services in Indonesia 2010
Informal
60%
80%
Other's accounts
100%
Underserved
11
Informal sector has larger share than banks in credit
Nationwide Access to Finance
Overlap Usage of Credit Instruments
Access to Credit in Indonesia
(All sample)
Financially Served - 60 %
4.2%
1.5%
Banks
7.9%
2.5%
Semi-formal
Using Formal - 26 %
Underserved
4.6%
5.5%
17
9
34
40
33.6%
0%
No Credit
40.2%
20%
Informal
40%
Bank
Semi-formal
60%
80%
Informal
100%
Underserved
The Poor's Access to Credit
(Represents 13% of total HHs)
Financially Served - 46 %
Using Formal - 11 %
Underserved
6
0%
5
35
20%
Bank
54
40%
Semi-formal
60%
Informal
80%
100%
Underserved
12
Reasons for financial exclusion
79%
1. Do not have money
2. Do not have a job
Saving (Bank
account)
3. Do not see advantages of having a bank
account
9%
4%
60%
1. Not creditworthy
Credit
2. Do not want to borrow
3. No collateral
20%
4%
45%
1. Do not have money
Insurance
2. Know nothing about insurance
3. Do not need insurance
Source: World Bank Study, Improving Access to Financial Services in Indonesia 2010
29%
17%
13
World Bank’s engagements in Financial Inclusion
in Indonesia
14
Who does the World Bank work with?
Government /Central
Bank
Private Sector
Civil Society
Vice President’s Office
Bank Indonesia
Commercial Banks
Coordinating Min. of Economic Affairs
Bappenas
BPRs (Rural Banks)
Min. of Finance, Bapepam -LK
Min. of Home Affairs
Coordinating Min. of People’s Welfare
Min. of Public Works
Min. of Cooperatives & SMEs
Associations of
Insurance Companies
Credit Guarantee
Companies
BNP2TKI
Min. of Manpower & Transmigration
Research
Institutes
PPTKIS (Migrant Workers
Recruitment Companies)
Local
community
based
organizations
Local Government
15
The Range of Financial Inclusion Engagements in Indonesia
2007
2008
2009
Diagnostic
Stage
2012
2011
2010
Macro /
National
Strategy
Individual Projects
NSFI development
Reform on GoI funded PNPM Mandiri RLFs Scheme
Fin Literacy ToT for GoI
Pilot Project (Research on Fin. Literacy Assessment on MWs)
Microinsurance Regulatory Framework
Microinsurance Marketplace
Review on MW Microinsurance
Assessment on KUR (GoI
Credit Guarantee Program)
Islamic Finance for MSMEs
Strengthening Savings &
Loans Cooperatives
Branchless Banking regulatory review
Two Diagnostics
Studies
Collaborative partnership
Evaluation of TabunganKu
(Basic bank account)
16
Results of collaborative partnership
2007
2008
2009
2010
2011
2012
Broader Awareness of Importance of Fin Incl among policy makers and regulators
ASEAN Financial Inclusion Seminar
Commitment at G20 Mexico
GoI Mid-Term Dev Plan (2010-2014): Improving Access to Finance for MWs
National Strategy of Fin Inc ideveloped
Bappepam-LK Master Plan 2010-2014
Facilitation of Microinsurance Development
No frills account (TabunganKu) introduced in Feb 2010
has reached more than 2.5 million accounts
KUR introduced and offered to previously unbanked MSMEs & TKIs
Awareness of Importance of Sustainability of GoI funded Fin Inc
Program
- Reform of GoI funded PNPM Mandiri RLFs Scheme
- Improving KUR scheme
17
Islamic Finance and Financial Inclusion for MSMEs in
Indonesia
18
Islamic Finance in Indonesia: A fast growing industry with strong potential
Assets, Financing and Deposits of Islamic Banks and Business
Units (trillion Rp)
Proportion of Sharia Insurance Assets
2.50%
Financing
Depositor Funds
2.05%
Assets
2.00%
1.71%
145.47
1.50%
97.52
66.09
36.54
28.01
27.94
26.72
20.67
20.45
2006
2007
49.56
2008
102.66
68.18
46.89
2009
2010
0.99%
1.36%
0.50%
76.04
52.27
36.85
38.20
115.42
1.00%
1.15%
0.00%
2006
2007
2008
2009
2010
2011
Source: BI, Bapepam LK, WB estimates
Proportion of Shares Bonds in local Bond Market
Corporate Bonds
Goverment Bonds
Government Sukuk
Corporate Sukuk
What the World Bank has done
The World Bank commissioned a study to look at access of Islamic
finance for SMEs which include the following activities:
1.
2.
81%
4%
15%
3%
1%
3.
Reviewed current Indonesian Islamic finance industry (products,
clients, etc.)
Conducted surveys: demand- supply side, covering 1,100 MSMEs
and 100 Islamic Financial Institutions (IFIs)
Developing strategy to enhance access SMEs to Islamic finance
Sharia Banks and MSMEs: Key Messages from the Study (1)
Sharia bank believe their products better serve the needs of MSMEs and
their simple process for granting financing provides competitive
advantage over conventional banks
Sharia banks have been providing higher access to financing for
SMEs - at 70%, compared to convential banks – at around 50%
120%
The Reasons Why MSME Used Sharia Financing:
100%
Other
29%
30%
80%
It suits MSME needs
4.50%
Reasonable transaction costs
71%
70%
19.40%
Low admin fee
SMEs
40%
53.70%
Attractive profit sharing rate
Non-SMEs
60%
7.50%
14.90%
Simple process
20%
67.20%
Safer
47.80%
0%
Feb-12
Cost (margin/interest), simple process and quality of services are
the main considerations for choosing Sharia financing over
conventional. Not much different factors seen in conventional.
Source: WB estimates
Sharia financing to MSMEs has been mostly used for
productive uses – additional working capital for current
business or expanding the business
61%
Open a new place/branch
Source: WB estimates
41.80% 49.30% 37.30%
35.80%
68.70% 77.60%
Other
Service
7.50%
Processing time
Increase business scale
82.10%
Promotion/Gift
Purchase new land
85.10%
Brand
7%
Purchase gold
Product variation
5%
Simplicity
Purchase new vehicles
15%
90.00%
80.00%
70.00%
60.00%
50.00%
40.00%
30.00%
20.00%
10.00%
0.00%
Coverage
12%
Important Factors in Choosing between Sharia and Conventional Financing
Margin (costs,
interest rates)
2011
Sharia Banks and MSMEs: Key Messages from the Study (2)
Lack of understanding of Sharia products appears to be a significant
hindrance for higher access of Sharia products by MSMEs
More than half of MSMEs surveyed said that they would use
Sharia banks’ products, if they have enough understanding.
Awareness can play a significant role in increasing the usage
of Sharia financing
Why MSMEs do not use Sharia banks’ products?
3%
39%
29%
3%
If you understand the products, would you use Sharia
products?
Do not understand the
products
No offers
4%
57.50%
Difficult to be
reached/inaccessable
No interest
42.50%
Closely related to one
particular religion
Other
22%
Yes
No
Only a small share of MSMEs surveyed claimed to know Sharia banks
and their products well
Most MSMEs use murabahah for Akad (73.79%) – there is a
room for product diversification
MSME's awareness about IFIs
1%
ijara
5.03%
6%
Know it very well
istishna
0.43%
26%
Somewhat know
No idea at all
mudharaba
1.34%
musharaka
2.48%
salam
0.00%
Have heard about it
67%
Qardh
16.94%
Source: WB estimates
murabahah
73.79%
Sharia Banks and MSMEs: Key Messages from the Study (3)
A significant portion of MSMEs respondents (30%)
indicated that do not have access to financial
institutions. A more prevalent for Micro enterprises
Micro-Sharia financial institutions such as the BMT seems
to be very popular source of financing by MSMEs, much
higher than conventional cooperatives and rural banks.
Have access to any Financial Institution?
Yes
No
MSMEs’ source of financing by type of institutions
45.0%
40.0%
39.7%
35.0%
30%
29.6%
30.0%
25.0%
20.0%
15.0%
8.4%
10.0%
2.3% 2.2% 1.8% 1.5% 1.3%
1.0% 1.0% 0.6% 0.6% 0.3% 0.3% 0.1% 0.1%
Source: WB estimates
Other
Regional Banks (Sharia Unit)
Sharia Regional Banks
Sharia Pawnshop
Venture Capital
Pawnshop
Business supplier
Sharia Venture Capital
Commercial Banks (Sharia Unit)
Sharia BPR
Venture Capital (Sharia Unit)
Regional Banks
BPR
Cooperative
Sharia Banks
0.0%
Individual lender/loan shark
Empowering Micro Sharia financial institution such
as the BMT is an effective strategy in enhancing
financial inclusion (access to finance) for the
productive poor and help them escape poverty.
3.5%
Commercial Banks
There are around 4,000 BMTs in Indonesia. With
their current presence in rural areas, these
institutions have the potential to serve more
productive poor at grass root level.
5.7%
5.0%
Sharia Cooperatives (BMT)
70%
CONCLUSION
23
Conclusion

Financial inclusion is means to achieve poverty reduction and local
economic growth

A more “inclusive” Indonesia is an overall policy goal for the country





Financial sector should be inclusive as well
Less than 50% of Indonesians have access to the formal financial sector
Less than a fifth have ever borrowed from a bank
Much lower for poor
Enhancing Access to Islamic Financing for SMEs in Indonesia




The Islamic finance industry has been growing strongly in Indonesia, but it is still
relatively small. Like its conventional peers, sharia banks dominate the industry.
Currently Sharia banks are already more inclined to served MSMEs.
Building awareness can play a significant role in increasing the use of Sharia
financing by MSMEs.
Empowering the micro sharia financial institutions can potentially increase
financing for productive poor who run micro enterprises.
ANNEX:
World Bank Engagement on Financial Inclusion in Indonesia
25
Financial Services for Migrant Workers (PPP)
WB with
BI +
Private
Sector
Partners: BI, Commercial bank, PPTKIS
Number of MWs is significant
People
MWs have specific financial needs
USD Billion
10
800,000
8
600,000
6
400,000
4
200,000
2
0
0
PreDeparture
Credits
Savings
Insurance
Total Legal MWs
During
Migration
Remittance
Channel
Savings
Post
Migration
Savings
Credits
Insurance
Total Remittance
 Steady growth in the number of legal MW:
around 520,000 in 2011 (drop in recent years was
due to GoI moratorium policy)
 Remittance growing: 6.9 USD billion in 2010
(about 1% as share of GDP)
• MWs have financial needs along the stages of
migration, but lack of knowledge in financial literacy
and financial credibility hinder their access.
What we are doing
Assist BI to develop a business model that integrate a financial scheme covering each stage of
migration process and providing MWs (and their families) with a wide range of financial services
and products including credit, savings, remittances and financial literacy training to both MWs
and their family
26
Regulatory review on Branchless Banking
Partners: IFC, BI, Banking Association, Telco Association
WB
Initiatives
Supporting
Government
Initiatives
90
80
• Comparing cell phone penetration with
access to finance, Indonesia has the
highest potential for branchless banking
implementation, (reaching 83 million
individuals).
70
Top 10 countries by potential impact
(millions of individuals)
60
50
40
30
20
10
0
What we are doing
• Assisting BI in assessing the regulatory environment for branchless banking
development in Indonesia which consisted of 3 components:
Industry assessment
Legal and regulatory review
Oversight framework
27
Improving microcredit scheme under PNPM Mandiri
Partners: Menko Kesra, Bappenas, MoHA, Min. Public Works
Supporting
Government
Initiatives
What we are doing
Project Title: PNPM Mandiri Revolving Loan Fund Capacity-Building and Sustainability Project
Project Area : 4 provinces (Central Java, Yogyakarta, NTT and West Sumatra)
Activities:

Restructure and improve performance of RLF operations (through needs assessment & technical trainings &
capacity building )

Determine the legal structure of RLFs

Establish linkage with commercial banks and other formal financial providers

Develop a long term strategy for revitalizing PNPM Mandiri RLFs
28
Pilot Project on Financial Literacy Training for Indonesian
Overseas Migrant Workers and Their Families
WB
Initiatives
Partners: CMEA, BNP2TKI, Disnakertrans Malang, PPTKIS
Activities
Output and Outcome
•
This pilot is a randomized research. The main objective is to
evaluate the impact of financial literacy training for migrant
workers and their families and to explore the effective ways
to improve their knowledge in managing their remittances
•
Modules: Training Guidelines, Trainer’s Guide for Migrant
Workers, Trainer’s Guide for Migrant Workers’ Family; and
supporting training tools: poster, comic book, financial book,
and brochure
•
Development of financial literacy training modules for
migrant workers and migrant workers’ families, and
development of training supporting tools
•
Overall, 432 migrant workers and/or their families from
Greater Malang area have been trained
•
Currently, the pilot is analyzing all the data collected from
the monitoring stage. Report on the results are expected to
be published in mid June 2012.
•
Preliminary analysis of the monitoring data shows that there
is a positive correlation between financial literacy training
and opening savings account.
•
•
Providing financial literacy training: trainings are conducted
for migrant workers who have registered to recruitment
agencies (PPTKIS) to work overseas and/or their families.
Phone and face to face monitoring were carried out to assess
how the training affected the household’s financial behavior.
29
TA to Support GOI’s Financial Literacy Initiatives for
Indonesian Overseas Migrant Workers and their Families
Partners: CMEA, BNP2TKI, BP3TKI, Disnakertrans, Government-owned Banks
Activities
•
ToT on financial literacy for staffs of BNP2TKI, BP3TKI
(regional office of BNP2TKI, in 19 provinces across
Indonesia) & Govt-owned banks; 2 batches in 2011 & 1
batch in 2012
•
Mentoring and monitoring during BNP2TKI – BP3TKI
financial literacy trainings to MWs and MWs families: 17
provinces in 2011 (April – November 2011) and 9 provinces
in 2012 (March – July 2012)
Outcome
•
•
•
BNP2TKI staff gained competency as mentor & Master
Trainer during ToT in 2012
Banks (BRI, BNI and Mandiri )committed to provide
support to BNP2TKI by involving their trainers in the ToT
Bank Mandiri committed to expand FL training as part
of its CSR activities
Supporting
Government
Initiatives
Output
•
•
•
•
•
•
ToT implementation: March 29 – April 8, 2011, 58 staffs
from 19 BP3TKIs, Bank BRI, Bank BNI, Bank Mandiri, TIFA
Foundation, and Sahabat Wanita Foundation participated
in the training. March 5 – 8, 2012, 37 staffs from 19
BP3TKIs, Bank BNI and Bank Mandiri participated in the
training.
Monitoring tools formulated: checklist, pre test/post test
questionnaire, time keeping form, mentoring &
monitoring form
Overall, 1,287 people were trained in 2011 (542 MWs, 723
MW’s families, 22 ex MWs)
Mailing list established (for BNP2TKI & BP3TKI staff) as a
media to discuss, learn, and share experience in
conducting FL training
FL advocacy video produced, and FL training tutorial
video in production process
Website on MWs financial education is under
construction
30
Promoting Micro-insurance
Partners: BNP2TKI, Bapepam-LK, Min. of Manpower & Transmigration
Supporting
Government
Initiatives
Review of Mandatory TKI Insurance
Support on Micro-insurance Development
Background
Background
Despite of its mandatory features critical
problems still exist : its effectiveness to provide
protection for MWs has been increasingly
questionable.

What the we are doing

Conduct a review on the existing MWs
insurance product and mechanism

Gather information on type of data collected by
any institution related to MWs
WEALTH
Formal insurance
industry
Informal
insurance
The insurance industry in Indonesia is relatively small
compared to the overall financial sector
 Bapepam-LK’s master plan for 2010-2014 includes the
development of micro insurance in Indonesia:
 a) expansion of the overall insurance market, particularly
given the low levels of penetration; and
 b) as a tool for social protection/safety net
What we are doing
Support microinsurance marketplace
 More details in the following page
 T.A. for Insurance Bureau of BapepamLK:

 to develop regulation for microinsurance to support
enabling environment in Indonesia
Insurable, without
access
Uninsurable through
market mechanisms
POPULATION
31
Promoting Micro-insurance
Partners: Bapepam-LK, the Indonesia Insurance Council, Institute of Risk
Management and Insurance (STIMRA), IFC, Global Index Insurance Facility (GIIF)
WB w/
Private
Sector +
GoI
Microinsurance Marketplace Event (October 2011)
What we are doing
• Two days event consisting of plenary session and
exhibition of existing micro insurance product
• Plenary session was used to share international and local
best practices
• Exhibition was used to promote micro insurance product
and services
• Around 370 people participated in the event coming from
both insurance and non-insurance sector
32
Basic no frills accounts: Tabunganku
Partners: BI, Commercial Banks, BPR
Supporting
Government
Initiatives
Overview of TabunganKu
Basic bank account initiative led by Bank Indonesia
along with 70 commercial banks and more than
1,000 BPRs/Sharia with main features: free monthly
administration fee, low minimum account balance &
low opening balance.
What we are doing
Assist Bank Indonesia to evaluate TabunganKu:
 Has it met costumer’s demand?
 Has it enhance access to formal savings?
 Is it commercially sustainable?
33
Credit Guarantee Scheme for MSMEs: KUR
Partners: CMEA, BI, State Owned Bank, Credit Guarantee Companies
Supporting
Government
Initiatives
Background

In 2007, the GoI launched KUR program to give access to credit for unbanked
MSMEs by providing partial credit guarantees to selected state owned banks

In a few years KUR has grown into one of the largest credit guarantee
programs in the World. As of April 2012, total disbursements were
IDR 72 trillions with 6.3 million borrowers

Due to the size of KUR, the GoI decided to review the KUR’s effectiveness in
order to maintain performances and prepare its scaling up in the coming
years
What we have done


The World Bank assists CMEA to evaluate the KUR program’s achievements to date and
develop recommendations on how to strengthen the program
Main findings:

There was evidenced that KUR has helped to increase access to credit to MSMEs

KUR has encouraged banks to lend to small enterprises and especially to
microenterprises

However further changes to improve the KUR scheme’s effectiveness are still needed
34
Support to KUR’s Policy Committee (CMEA) to develop
KUR’s Monitoring & Evaluation (M&E) Framework
Supporting
Government
Initiatives
Partners: KUR Policy Committee (CMEA)
Background
 KUR program has been expanding strongly in respects of disbursement, number of
participating banks and debtors. The Government has indicated continued supports
on KUR and it has increased the target of disbursement of KUR.
 There is absent of an integrated M&E framework of KUR which is important if GoI
wants to review/assess impacts of the KUR program.
 M&E is required by KUR related regulations (KUR’s MOU, Inpres No. 5/2008, PP No.
39/2006).
What we have been doing:



Organized discussions with related stakeholder (BPKP, BI, Guarantee Company, Banks)
to understand existing monitoring systems in each institutions.
Identified the gap/areas for improvements and currently on the process of drafting a
proposed framework of M & E.
Expected completion by December 2012.
35
Enhancing Access to Islamic Financing for
SMEs in Indonesia:
Partners: BI, Bapepam LK and Ministry of SMEs & Cooperative
WB
Initiatives
Supporting
Government
Initiatives
Background




The Islamic finance institutions (banking and NBFI) - have been growing strongly In Indonesia. The Sharia
banking assets has increased by around 40% annually but it only accounts 5% of total banks’ asset. It suggest
the potential for further growth is strong.
On the other hand, MSME also shows strong growth of number of entities and business volume However,
access to financing is still known as one constraint.
There is a growing interest in the World Bank to work on supporting Islamic finance to complement the MSME
finance works but its knowledge on level of access of MSMEs to Islamic financing is limited hence it
commissioned this project.
The results also expected to Indonesia has the potential to have a vibrant Islamic finance industry.
What we have done
The project had a number of activities:
 Conducted an review of current Indonesian Islamic finance industry (products, clients, etc)
 Conducted demand and supply –side surveys
 Develop an assessment tools on how to assess level of access to Islamic finance
 Prepare a concept of financing facility for the World Bank to consider supporting in Indonesia.
Enhancing Access to Islamic Financing for
SMEs in Indonesia:
WB
Initiatives
Partners: BI, Bapepam LK and Ministry of SMEs & Cooperative
The main reason MSME not used IFIs Product
The Reasons why MSME used Sharia Financing:
Perception of IFIs
Not understanding
the products
No offering
3%
4%
Others
7.50%
Suitable for the MSME need
53.70%
Interesting sharing rate
Low administration fee
Supporting
Government
Initiatives
39%
29%
19.40%
Inaccessible locations
No interest
4.50%
Reasonable price of selling-buying
Simple process
Safer
14.90%
67.20%
3%
22%
Identical to particular
religion
Others
47.80%
What we have found:
• The survey results suggest the perception of Micro-SMEs toward Islamic Financial Institutions (IFI) is positive and
Sharia finance is well received by the Micro-SMEs.
•A majority of Micro-SMEs surveyed indicated the simple process of Sharia financing is an important factor for their
decision to use Sharia financing and Sharia finance products do serve their needs.
• The lack of understanding of Sharia products appears to be a significant hindrance for higher access of Islamic finance
for Micro-SMEs in Indonesia.
National Strategy of Financial Inclusion
Supporting
Government
Initiatives
Partners: TNP2K, Bank Indonesia, Bappepam-LK
a “People-Centered” strategy approach
with the mission
“to Achieve a Financial System that is
Accessible by all Layers of the Community
to Promote Economic Growth, Poverty
Reduction and Income Equality in
Indonesia”
Strategy designed with a mutually
reinforcing fit between these three
components:
Targeting the
poor
What we are doing
• Assisting the Vice President office to
develop the National Strategy for
Financial Inclusion
• Accomodate socialization / discussion
between the VP office with Bank
Indonesia (regulator of banks) and
Bappepam-LK (regulator of NBFI)
• Assisting VP office in providing a better
understanding to the other ministries on
their role & involvement in the strategy
Poverty
Reduction
Financial
Stability
Promoting
Enabling
Regulation &
Consumer
Protection
Economic
Growth
Promoting
Local
Economic
Development
Strengthening and Empowering the Saving and Loan Cooperative
Sector : Increasing Access to Finance for Micro-SMEs
Partners: Bappenas, Ministry of SMEs & Cooperative
Background



KSP /USP shows strong growth of business and plays
important roles in providing financing for Micro and Small
enterprises.
GoI’s policy to strengthen and empower KSP/USP to
increase the above roles whilst maintaining the value of
Cooperatives.
Need to have a through analysis of issues, challenges and
prospects of the KSP/USP before formulating policies.
What we will do
The activities will be divided into two components:
 Component 1: Conduct a KSP/USP study:
Phase 1 designing and preparing the study (literature review,
write case studies, prepare research tools. (March – June 2012)
Phase II Complete the study, will include surveys/interviews (July
2012 – June 2013)
 Component 2: Follow up of Study: Technical Assistant & Capacity
Building
Supporting
Government
Initiatives