Deepening of the national financial market is critical for Indonesia to accelerate economic growth amid global weakness, Finance Minister Sri Mulyani has declared.
Given the low degree of financial market participation in Indonesia, many financial institutions had revised down their growth projections due to the current economic situation, the Minister said.
"Compared to the region, our financial penetration is shockingly low, only slightly better than that of Vietnam," Sri Mulyani said during an international seminar on ‘Financial Market Deepening 2016: The Way Forward for Indonesia’ held at Bank Indonesia’s headquarters in Jakarta on Monday.
Indonesia, Sri Mulyani said, was faring better with regard to economic growth, with an annual increase of 5.18 percent achieved in the second quarter. However, the growth rate was not high enough to support social welfare, as a high poverty rate and inequality ratio were persistently troubling the country.
To address these issues, the government was continuing efforts to create more balanced and inclusive growth, among other measures through the financial sector, which contributed 4.2 percent to the gross domestic product (GDP) in 2016, up from last year’s share of 3.9 percent of GDP.
Meanwhile, the banking industry had become more saturated than other financial sector industries. Higher growth should be expected from non-bank financial institutions, Sri Mulyani said. "That is why it is very critical to diversify the financial sector and its instruments," she reiterated