Indonesia Financial Services Authority (OJK) • The Indonesia Financial Services Authority (IFSA) (Indonesian: Otoritas Jasa Keuangan/OJK) is a state agency and an
independent institution in carrying out its duties and responsibilities established under Act No. 21 of 2011.
• OJK is aiming that the overall activities within the financial services sector are: Implemented in an organized, fair, transparent and accountable manner, Able to realize the financial system that grows in a sustainable and stable manner and Capable of protecting the interests of consumers and the society.
• OJK performs its regulatory and supervisory duties over: (a) financial services activities in the banking sector; (b) financial services activities in the capital market sector; and (c) financial services activities in the sectors of insurance, pension funds, financing institutions, and other financial services institutions.
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BANK INDONESIA
Payment System
Monetary Policy
Banking
GOVERNMENT OF INDONESIA
CAPITAL MARKET
INSURANCE OTHER
FINANCIAL INSTITUTION
BANK INDONESIA
Macro Prudential
Payment System
Monetary Policy
OJK
BANKING CAPITAL MARKET
INSURANCE OTHER
FINANCIAL INSTITUTION
.... - 2011 2012 - ....
IN INDONESIAN BANKING SYSTEM THERE IS NO DEVELOPMENT BANK; FINANCIAL SERVICES IS CONDUCTED BY
COMMERCIAL BANK AND RURAL BANK ( BOTH CONVENTIONAL AND SHARIA/ISLAMIC BANK).
THE ROLE OF BANKING IS STILL DOMINANT REPRESENTING 69% OF NATIONAL FINANCIAL INDUSTRY
Indonesia Financial Market
Banking*InsuranceCapital MarketNon Bank Financial
69%
8%
16%
9%
FINANCIAL AND BANKING SYSTEM IN INDONESIA 3
NOTE: - *Indonesia Banking Statistics, April 2015
- Total assets in IDR: Banking 4581 T, Insurance 556 T, Capital Market 1083 T, Non bank FI 433 million
T (Sources OJK, August 2013).
118 commercial banks 1.642 rural banks
12 Islamic Commercial banks
22 Islamic Windows
162 Islamic Rural banks
1.Bank Indonesia Regulation No. 14/15/2012 (Asset Quality Assessment for Commercial Banks)
1.Business growth potential; 2.Market conditions and debtor position
within competition; 3.Management quality and labor
problems; 4.Supports from group/affiliations; and 5.Business performed by the debtor in
the context of environmental preservation efforts (for debtors who are obliged to conduct environmental management efforts according to the applied laws)
1.Profitability; 2.Capital Structure; 3.Cash Flow; and 4.Sensitivity to The
Market Risks.
1.Prompt payment of debt and its interests;
2.The availability and the accuracy of debtors’ financial information;
3.Completeness of loan documentations;
4.Obedience to the credit agreement;
5.The suitability of the use of funds; and
6.The fairness source of liability payment
Credit Quality Assessment
1. BUSINESS PROSPECTS 2. DEBTOR
PERFORMANCE 3. ABILITY TO PAY
The credit quality assessment considers the significance and the materiality of every assessment factors and components; as well as the relevance of the assessment and components of the debtor
Banking Regulation on Assest Quality
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5
6
Definition and Principles of Sustainable Finance in Indonesia
Sustainable finance in Indonesia is defined as comprehensive support from the financial service industry to achieve sustainable development resulted from a harmonious relationship between economic, social and environmental interests. Sustainable finance comprised of the following dimensions: 1. Achieve industry, social and economic superiority in order to address the threats of global
warming and mitigate other environmental and social issues; 2. Aims to encourage the shifting of the target towards a competitive low carbon economy; 3. Strategically promoting environmentally friendly investment in various business/ economic
sectors; and 4. Supporting the principles of development in Indonesia as stated in the RPJM, namely the 4P
(pro-growth, pro-jobs, pro-poor, and pro-environment). Principles: 1. Risk Management Principle 2. Sustainable Priority Economic Sector Development Principle 3. Environmental and Social Governance and Reporting Principle 4. Capacity Enhancement and Collaborative Partnership Principle
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Sustainable Finance Institution
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Sustainable Finance Framework
DEVELOPMENT & CLIMATE CHANGE Law No. 32 of 2009 concerning Conservation and Management
of the Environment
Indonesian commitment for climate change
National Action Plan for the Reduction of Green
House Gas Emission (RAN – GRK)
1. Sectors Contribution towards the Targeted GHG emissions reduction
2. Financing needs for GHG emissions reduction
Long Term Development Plan (RPJPM)
1. Green Economy 2. Priority Economic Sectors 3. Financing needs for economic
development Compliance
environmental economic
instruments
Competitive
Contribution to Climate Change
Road Map
Readiness of Financial
Services Industry
Contribution to Financial System Stability
1. Better risk management
2. Long term vision 1. Product development &
innovation 2. Increase corporate value
Contribution to economic development
Resilience
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Increase supply of sustainable financing to strengthen competitiveness of Indonesian financial service industry
Increase oversight and coordination of sustainable finance implementation
Increase demand Of environmentally friendly financing products
Through the strengthening of risk management, corporate governance in environmental and social aspects, as well as the acceleration of the implementation of the Environmental Law.
Through public awareness raising and education on green investment and green financing
Through provision of incentives to FSI to increase green products portfolio, encourage innovation, increase competency, information sharing and increase access to global public fund
Sustainability Report
Forum on Sustainable Finance at national and regional levels
Research and Development
Information hub
Green lending models for priority sectors
Increase access of FSIs to global public funds
Fiscal and non-fiscal incentives
Prudential incentives
Trainings and national seminars on Sustainable FInance
Regulation on Principles and Definition of Sustainable Finance in Indonesia
Requirement on Portfolio for Sustainable finance
Development of green finance products, green bonds & green index
Campaign program to potential investors on green financial products
Strategic Activities to Implement Sustainable Finance
2015 2016 2017 2018 2019 2020-2024
Sustainable Finance Award
Strategic Goals
Roadmap for Sustainable Finance
Basis for Implementation of SF:
1. Policy on SF Principles
2. Policy on Increase on SF portfolio
3. Policy on SF supervision
Incentives (Under OJK Authority) : 1. Prudential Incentives 2. Information Hub
3. Award
4. SF Report
Incentives and Cooperation with relevant institution
1. Fiscal incentives
2. Non Fiscal incentives
Strengthening Resiliency :
strengthening of
risk management and corporate
governance in environmental and
social aspects
2015 2016 2017-2018 2019-2024
2015-2019 : Campaign, Environmental Analyst Training, Development of Green Product, Green Bond and Green Index, Improve access to Global Public Funds, Coordination with Relevant Institutions
© 2015
The Implementation Plan of 2015 Sustainable Finance Roadmap
1. Sustainable Finance regulation preparation. 2. Formation of Sustainable Financing guidelines for energy conservation. 3. Research preparation on green bonds and green index. 4. Research preparation on green products for insurance and leasing/multi-finance companies. 5. Awareness program for financial services industry practitioners which includes: Seminar,
Workshop & FGD 6. Capacity building : Environmental Analysis Training 7. Joint research on Challenges, Incentives and Disincentives in the Implementation of Sustainable
Finance in Indonesia 8. Preparation for the establishment of an Information hub 9. Establishment of team award for Sustainable Finance
11 © 2014
OJK Survey on Sustainable Financing, 2015
FSIs* Financing/Loan (Billion) Dec 2014
Bank IDR 33,565.02 (1,66% of total Conventional bank loan porfolio and 1,97% of total Shariah bank financing porfolio)
Financing Institution
IDR 954.60
Pension Fund IDR 736.00
Total IDR 35,255.62 *32 FSIs includes: 27 Bank, 2 special purpose Finance institution, 3 Pension Funds.
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12 © 2014
Sektor Ekonomi Pengelolaan dan Perlindungan Lingkungan Hidup Financial Institution’s Porfolio on Sustainable Finance
3
5
3
0
1
2
3
4
5
6
LimbahBeracun
KebakaranHutan
ProyekPembangkit
Polusi AsapKebakaran
Lainnya
Portfolio Insurance Companies in Sustainable Finance
Penyaluran Asuransi
16 18
14 17
5 8
5
2 1
1
3
2
0
5
10
15
20
25
Sectors Receive Sustainable Financing from Financial Institutions
Pembiayaan oleh Bank Pembiayaan oleh LP Investasi oleh Dapen
Renewable Energy, Energy Efficiency and Waste management are sectors that receive highest financing from financial institutions . Insurance companies also play a role to those sectors.