Financial Sector Strengthening Indonesia, Phase III


The Indonesia Financial Sector Strengthening Program (IFSSP) aims at strengthening the stability of the financial sector and promoting the development of a sound and inclusive financial sector that fosters sustainable economic growth and job creation in Indonesia.

Country/region Period Budget
Indonesia
01.01.2021 - 30.04.2025
CHF  5’700’000
Background

IFSSP III supports the Government of Indonesia (GoI) to achieve its medium-term growth and poverty reduction objectives through a stable financial system. In this sense, IFSSP III aims to 1) strengthen financial sector stability in order to enhance crisis preparedness, improve the legal and regulatory framework of supervision (pillar 1) and 2) promote the development of an inclusive financial sector (pillar 2). In responding to the most pressing national priorities, IFSSP III links closely to the GoI’s agenda to respond to the COVID-19 pandemic and its economic aftermath.

Objectives

IFSSP's overarching goal is to support the Government of Indonesia's (GoI) efforts to achieve its medium-term growth and poverty reduction objectives, through increasing the depth, improving the efficiency, and strengthening the resilience of the financial sector and thus contribute to job creation and economic growth.

Medium-term outcomes

The Program’s development objectives are:

1. To strengthen financial sector stability (outcome 1). This will be achieved by a) improving the supervisory capacity, b) enhancing resolution approaches, c) strengthening crisis preparedness, d) sound legal and regulatory frameworks, while building the ecosystems for greater integration of digital technology into these functions.

2. To promote the development of an inclusive financial sector (outcome 2). This will be achieved through the promotion of digital financial services that contribute to the National Financial Inclusion Strategy objectives of the GoI.

The program further encompasses activities foreseen to support the GoI’s efforts with regard to COVID-19 and its economic impacts and a "flexible first response" in order to support new initiatives that fit within the strategic parameters of IFSSPs both pillars on stability and inclusion.

Results

Expected results:  

Financial sector regulation and supervision technologies introduced-

Banking Resolution and Deposit Insurance improved-

Crisis Surveillance strengthened-

Legal and Regulatory Framework strengthened-

Access and Usage of Digital Financial Services expanded- and

Digital and Financial Infrastructure improved.


Results from previous phases:  

IFSSP's interventions provided substantial support to the GoI's Financial Sector Crisis Prevention and Mitigation Law. They further supported the development of an Early Warning System (EWS), of bank resolution tools and the revision of the Insurance Law. IFSSP contributed to the NSFI 2016-2020 and provided relevant recommendations for the Medium-Term Development Plan 2015-2019. IFSSP further supported the drafting of the microinsurance regulation and provided recommendations regarding the corporate bond market for infrastructure financing. Later, it contributed to the consolidation within the banking system, the development of the FinTech industry, supported the Presidential Instruction promoting savings and substantially contributed to an agreement between two state banks, the Ministry of Home Affairs and financial market regulators, to use biometric data to open bank accounts more easily and to issuing of OJK guidelines for financial services providers to enhance transparency.


Directorate/federal office responsible SECO
Budget Current phase Swiss budget CHF    5’700’000 Swiss disbursement to date CHF    0 Budget inclusive project partner CHF    5’700’000
Project phases Phase 3 01.01.2021 - 30.04.2025   (Current phase) Phase 2 01.10.2017 - 30.09.2021   (Completed) Phase 1 27.01.2012 - 30.09.2017   (Completed)