Indonesian - Economy Monetary Policy and Financial Stability

Transcription

1. Indonesian  Economy  :  Monetary  Policy   and  Financial  Stability  –  Recent   Development  
2. Execu &ve  Summary   2   v  Indonesia’s economic growth remains robust in 2012 amidst the continuation of global economic slowdown. Contributed by buoyant consumption and investment, economic growth in the Q4-2012 reached 6.11%, and charted 6.23% for the whole year of 2012. v  Inflation in January 2013 remained subdued and arrive at 4.57%(yoy) which is within target range of 4.5%±1%. This inflation supported by the implementation of monetary and macroprudential policy mix, as well as policy coordination with the Government through national inflation control team (TPI) and regional inflation control team (TPID). v  Financial system stability remained solid with intermediation function is improving within prudential manner as indicated by secure level of capital adequacy ratio (CAR) is well above minimum level of 8% and gross non-performing loan (NPL) below 5%. In December 2012, credit growth charted 23.1% (yoy). Considering the type of loan, investment loan recorded the highest growth of 27.4% (yoy), in line with the increased in investment. v  In the Board of Governors' Meeting convened on 12 February 2013, Bank Indonesia decided to hold the BI rate steady at 5.75% in which considered consistent with low inflation forecast and contained within its target range of 4.5%±1% in 2013 and 2014. Bank Indonesia believes that the implementation of policy mix together with strengthen coordination with the Government will be able to maintain macroeconomic stability and sustainable economic growth.
3. Execu &ve  Summary   Monetary policy v  Keep policy rate unchanged at 5.75% since March 2012, this level considered to be consistent with inflation target v  Maintain IDR exchange rate stability v  Strengthen monetary policy by implementing monetary and macroprudential policy mix v  Deepening of the foreign exchange market   Exchange Rate   v  On January 2013, Rupiah depreciated by 0.22% (mtm) to Rp9.654 per USD, with a contained volatility. v  In the future, BI will continue to maintain the stability of Rupiah exchange rate consistent with its economic fundamentals. Furthermore, BI will support the formation of a reference to Rupiah exchange rate in the domestic spot market. This reference is expected to promote foreign exchange market efficiency, deepening the domestic financial market 3  
4. Execu &ve  Summary   4   Sound Financial Sector v  Supported by various policies implemented by Bank Indonesia, banking industry has been more resilient, as indicated by secure level of CAR above the minimum level of 8% (17.3% at the end of Dec’2012) and gross NPLs managed at comfortably safe level below 5% (1.9% at the end of Dec’2012). v  Further improvement in National banking intermediation is also reflected in progressively improving credit growth, recorded in December 2012 at 23.1% (yoy), in which investment credit, working capital credit, and consumption credit grew by 27.4% (yoy), 23.2% (yoy), and 19.9% (yoy), respectively.
5. Execu &ve  Summary   5   Roles of Banking in the Domestic Economy v  The role of the Indonesian banking is not yet optimal to support the real sector. Credit to GDP ratio is relatively low compared to the ASEAN countries. v  The Indonesian Credit to GDP ratio stands between 26%-32%, almost the same as Philippines and Brunei. While others, especially Thailand and Singapore has more than 100% credit to GDP ratio. Malaysia is following them with a growing ratio from 96% to 112%. v  As such, the are more rooms to utilize the banking sector to boost the domestic economy. % 160 140 Indonesia Singapore Malaysia Phillipines Brunei Thailand 2008 26.60 106.70 96.70 29.10 35.20 113.00 2009 27.70 109.90 111.60 29.20 44.50 116.40 2010 29.10 100.00 110.70 29.60 40.90 123.90 2011 31.70 112.60 112.20 31.80 31.80 140.10 2008 2009 120 2010 2011 100 80 60 40 20 0 Indonesia Singapore Malaysia Phillipines Brunei Thailand
6. Indonesian  Islamic  Banks  –  Sustainable   Growth  and  Role  in  Economic   Development  &  Financial  Stability        
7. Indonesia ’s  Islamic  Bank  (iB)    Development   7   Rp. Triliun 250,000,000 60% ASSET (left axis) GASSET Gfinancing Gdeposit 50% 200,000,000 40% 150,000,000 30% 100,000,000 20% 50,000,000 Jan-07 Mar-07 May-07 Jul-07 Sep-07 Nov-07 Jan-08 Mar-08 Mei-08 Juli-08 Sept - 08 Nov-08 Jan-09 Mar-09 Mei-09 Jul-09 Sept-09 Nov-09 Jan-10 Mar-10 May-10 Jul-10 Sep-10 Nov-10 Jan-11 Feb-11 May-11 Jul-11 Sep-11 Nov-11 Jan-12 Mar-12 May-12 Jul-12 Sep-12 Nov-12 0 10% 0% Indonesia’s IB (BUS +UUS) average growth in last 5 years reach 37% for asset then 36% for financing and 38% for deposits. Whereas in 2012, the growth for asset (±34%) value Rp. 195 T, financing (±44%) value Rp.147,5 T and deposit (±28%) value Rp.147,5 T. Indonesia’s iB aset ±98% dominated by Islamic Commercial Bank (BUS) and Islamic Busines Unit (UUS). In year 2012, the IB’s (BUS+UUS) performance relatively good, reflected by : (i) optimum intermediation function with average FDR reach 97,16%; (ii) CAR beyond minimum regulation 8% with average CAR reach ±17%; and (iii) Non Performing Financing (NPF) under 5% with average 2.72% and even in December 2012 reach 2.22%.
8. Current  Growth  is  in  line  with  projec&ons   8   230,000,000 180,000,000 European Crisis 210,000,000 Nov-­‐12 Sep-­‐12 Jul-­‐12 May-­‐12 Mar-­‐12 Jan-­‐12 Nov-­‐11 Sep-­‐11 Jul-­‐11 May-­‐11 Projections 90,000,000 Mar-­‐11 Actual Jul-­‐1 2 110,000,000 May-­‐1 2 60,000,000 Mar-­‐1 2 130,000,000 Jan-­‐1 2 80,000,000 Nov-­‐11 150,000,000 Sep-­‐1 1 100,000,000 Jul-­‐1 1 170,000,000 May-­‐1 1 120,000,000 Mar-­‐1 1 190,000,000 Jan-­‐1 1 140,000,000 Jan-­‐11 160,000,000 Islamic banks’ (BUS+UUS+BPRS) asset growing in 2012 reach Rp. 199,72 T and within BI’s previous projection scenarios between moderate scenario (Rp. 187.2T) and optimistic scenario (Rp.206T).
9. Increasing  number  of  Islamic    Bank  (iB)  s  Customer     ü  With 11 Islamic Commercial Bank (BUS), 24 Islamic Business Unit (UUS) and 156 Islamic Rural Bank (BPRS), the office network increased from 2.101 in year 2011 becoming into 2.663 (26,75%). ü  The increasing number of iB’s customer à iB’s account number (financing + deposits) increases ± 4 million accounts from ± 10.4 mio year 2011 into ± 14.4 mio in Dec’12 (38%, yoy) §  The significant increasing number of iB’s customer in last 4 years (average ± 31%), even growth in period 2011 – 2012 (± 38%) higher than previous period à reflect the more trusted iB by Indonesia’s people for saving/invest fund §  More broaden customer has been serviced by Islamic banks 9  
10. The Decreasing Growth of Non Productive Financing Share /Sector 10   ü The direction of more financing toward productive sector looks on the right track by the end of 2012 ü Decreasing growth of non productive financing share   v  Financing growth to Non productive sector (services and others) has decelerated from 8,4% (2010 - 2011) become 0,82% (2011 – 2012) or decreasing 7,59%. v  The growth share of Non Productive financing type compare to productive (working capital + Investment) has decelerated from 30,09% (2010 - 2011) become 1,92% (2011 - 2012) or decreasing 28%. Data :Sept’12
11. Islamic  Banks  (iB)  :  Promote  Financial  Stability   11   Advantages  as  Islamic  banks  during  current  global  uncertain  periods:   1.  2.  3.  4.  Profit  and  loss  sharing  system  will  be  beneficial  and  provide  fair  return  to  all  parCes.  With  this   system,  islamic  banks  will  promote  social  welfare  as  the  benefit  receivers  need  to  pay  zakah  as  part   of  social  contribuCon  while  complying  to  the  shariah  principle.     The  products  offered  by  islamic  banks  always  use  real  sector  transacCon  as  its  underlying;   therefore,  the  impact  of  islamic  financial  transacCon  can  be  significant  to  promote  economic   growth   Reduce  potenCal  excessive  speculaCon  since  islamic  finance  prohibits  the  speculaCve  moCve.   DerivaCves  products  are  prohibited  by  islamic  principles  because  of  the  existance  of  gharar   In  the  case  of  Indonesia:       a.  b.  islamic  banks  nature  is  to  focus  on  developing  small  and  medium  enterprises  as  the  underlying,  and  there   are  rela&vely  small  risks  involved   Exposure  to  currency  risk,  financial  sector  is  rela&vely  small  
12. Indonesian  Islamic  Banks  –  Policy   DirecCon  and  Prospect  
13. Maintaining  Strong  Growth   13   •  InnovaCon  of  genuine  sharia  Products   and  services  :  support  the  people   need  ,more  broaden  customer  base  and     more  producCve  acCviCes   •  Strategic  alliance  and  strong   infrastructure  support  :  i.e.  Government   support,    OpCmizaCon  synergy  with  iB’s   holding/Grup  companies.   •  More  professionals  &  qualified  HRD   •  Intensified  EducaCon  and  socializaCon     With Rp.199,72 trilion of iB (BUS+UUS+BPRS) asset in Dec’12 (eq $ 22 billion) we only account for 4.6% of Indonesian banking industry, or less than 2% of global islamic assets.   This strategy will attract more broaden customers to use services from islamic banks, and in the end this will have an impact to strong growth
14. BI  Policy:  Product  Innova&on   1.  14   In  the  current  highly  compeCCve  environment,  islamic  banks  cannot  rely  on  standard   product  to  a\ract  customers.  Islamic  financial  insCtuCons  must  act  and  able  to  offer   pure  and  genuine  Islamic  products  that  bring  up  the  uniqueness  of  sharia  principles   that  can  meet  customers'  and  investors  needs   2.  BI  will  facilitate  Working  Group  Discussions  (with  NaConal  Sharia  Board  and  indonesia   Accountant  AssociaCon)  to  acCvate  innovaCon  and  creaCvity  regarding  product   development  to  a\ract  more  customers.   3.  BI  will  consider  to  improve  related  regula&ons  on  Islamic  banking  products  in  order  to   increase  the  efficiency  of  the  product  licensing  process.     4.  In  order  to  increase  public  awareness  to  Islamic  banking  products  (iB  financial  literacy),   socializa&on  programs  /  public  educa&on  and  communica&on  will  be  more  focused  on   equality  "parity"  and  the  uniqueness  of  "dis&nc&veness"  of  the  product   Islamic  banking.     Islamic  banks  are  expected  to  strengthen  the  product  development  unit  in  order  to   accelerate  the  equaliza&on  of  products  and  service  levels  with  conven&onal  banks,   to  increase  service  to  meet  customers  needs    
15. BI  Policy:  Emphasis  Financing  in  Produc&ve  Sector   15   1.  Bank  Indonesia  in  its  capacity  will  facilitate  link  and  match  program  between   islamic  banks  and  industry  which  is  prioriCzed  by  the  government,  such  as   infrastructure,  agriculture,  as  well  as  others.   2.  Focus  Group  Discussions  and  business  match  will  be  the  main  forum  to  match   supply  and  demand  between  banks  and  producCve  sectors.      à  BI  have  facilitated  several  FGDs  and  have  received  posi&ve  feedbacks.   In return, this will help promoting resilience of islamic banks, as well as generate higher asset growth, so that asset share of islamic banks compared to that of in conventional will gradually increase à projection of 15-20% in the next decade
16. BI  Policy:  Support  Adequate  iBs  Liquidity  Framework       •  BI  will  support  efforts  to  increase  islamic  money   market  transac&on  through  enhancement  the   features  of  Interbank  Mudharabah  CerCficate  (SIMA)   as  underlying  transacCons,     •  We  are  introducing  sharia  commodity  trading   scheme  to  add  islamic  money  market  instruments,   and  to  increase  the  role  of  money  broker  in  islamic   money  market  transacCon.     •  Providing  complete  financial  services  to  client,  islamic   banks  can  also  provide  financial  services  in  the  form   of  foreign  currency  ,  such  as  import  payments  or   other  foreign  currency  liabiliCes  à    miCgate  currency   risks  à  review  the  mechanisms  and  hedging   instruments  which  comply  with  sharia  principles.   •  BI  also  support  cross  border  liquidity  instrument  in   foreign  currency  à  IILM  iniCaCves  issuing  short  term   global  sukuk  in  USD     16   Development in islamic financial market, especially money market instruments, will help banks to manage liquidity à lower liquidity risk Help Promoting Asset Growth
17. Projec &on  of  Indonesia’s  iB  (BUS+UUS+BPRS):  2013   Baseline Asset Deposit (DPK) Financing (PYD) Moderate Optimistic (Rp. Triliun) (%) (Rp. Triliun) (%) (Rp. Triliun) (%) 255 36 % 269 44% 296 58% 168 17% 177 23% 186 29% 200 36% 211 43% 222 50% Growth (%) Growth (Rp. Triliun) 60,00% 300 50,00% 250 40,00% Base Pesimis line 30,00% Moderat 20,00% Optimis 200 Base Pesimis line 150 Moderat 100 Optimis 50 10,00% 0 0,00% Aset DPK PYD Aset DPK PYD 17