Financial sector reform has utmost urgency in enhancing the role of intermediation and improvement of our financial system's resilience
Jakarta (ANTARA) - Bill on Development and Improvement of the Financial Sector had a strategic value and was important for sustainable, fair, and highly competitive progress of national development, Finance Minister Sri Mulyani Indrawati stated.

"Financial sector reform has utmost urgency in enhancing the role of intermediation and improvement of our financial system's resilience," Minister Indrawati remarked at a hearing with Commission XI of the House of Representatives here on Thursday.

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The minister noted that the financial sector -- particularly one with the stalwart intermediary function -- was a vital, strategic sector to support the progress of development and welfare of a state.

Should the domestic financial sector possess strong, efficient, stable, deep, credible, and inclusive intermediary functions, then Indonesia will be able to improve the economy to become a developed country towards achieving high income levels in a fair and equitable manner.

However, the minister said that the financial sector still encountered several fundamental issues, so the proportion of financial sector assets was not evenly distributed and was still predominantly the banking sector.

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Indrawati expected assets from the non-bank financial industry, as a source of long-term funds, to be able to provide financing in terms of development.

Moreover, the minister brought attention to Indonesia's financial sector performance, in terms of the gross domestic product (GDP), which was still relatively below ASEAN-5 or even ASEAN-6 countries.

This shows that the role of the financial industry in collecting public funds is still very limited, so there were still vast opportunities of its market that could be further explored.

She concluded by saying that Indonesia's banking overhead costs were also still relatively high as compared to ASEAN countries. This was shown through the high net interest margin that has resulted in high loan interest rates.

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Translator: Agatha O V, Mecca Yumna
Editor: Fardah Assegaf
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