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BI OUTLINES INDONESIAN PAYMENT VISIONS

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The Governor of Bank Indonesia, Perry Warjiyo.

Greatindonesia.co.id, Jakarta – The Governor of Bank Indonesia, Perry Warjiyo, has outlined Indonesia’s Payment System (IPS) 2025 Visions to ensure the current trend of digitalisation develops within a conducive digital economic and financial ecosystem.

The visions are a response to the recent proliferation of digitalisation that has significantly altered the risk landscape, through cyber threats, monopolistic competition and shadow banking, which could undermine the effectiveness of monetary controls, the stability of the financial system and sound payment systems, according to a statement released here on Thursday (30/5/2019).

The statement was delivered during an international seminar, entitled Digital Transformation of the Indonesian Economy, which was held on Monday (27/5/2019) in Jakarta.

The IPS 2025 Visions are: First, reinforce the integration of the national digital economy and finance to ensure the proper functioning of the central bank mandate in money circulation, monetary policy, and the stability of the financial system, as well as financial inclusions.

Second, work for faster digital transformations within the banking industry to sustain the banks’ role as a primary institution in the digital economy and finance, through the implementation of open-banking standards, as well as the deployment of digital technology and data in their financial products and services.

Third, ensure the interlinks between Fin-Tech and banks to contain the escalation of shadow-banking risks through the regulation of the use of digital technology (e.g. Application Programming Interface-API), business relations, and business ownerships.

Fourth, indemnify the balance among innovation, consumer protection, integrity, and stability, as well as fair competition, through the implementation of digital Know Your Customer (KYC), Anti-Money Laundering and Combatting the Financing of Terrorism (AML/CFT), data/information/public business openness, and the deployment of Reg-tech and Sup-tech for reporting, regulatory and supervisory tasks.

Fifth, safeguard national interests on the cross-border use of the digital economy and finance through the obligation of domestic processing of all onshore transactions and domestic partnerships for all foreign players, under the consideration of the principles of reciprocity.

The five IPS 2025 Visions will materialise through five initiatives, to be carried out directly by Bank Indonesia in pursuance of the central bank’s duties and jurisdiction, as well as implemented through productive collaboration and coordination with relevant government ministries and institutions, along with the industry.

As a preliminary step towards digital transformation of the national payment system, and to help accelerate digital economic and financial development, Bank Indonesia held a soft launching of the QR Code Indonesia Standard (QRIS).

QRIS will allow all QR payments to interconnect and become interoperable using one standard QR Code.

Initially, Bank Indonesia will introduce QRIS in the Merchant Presented Mode (MPM), with implementation commencing in the latter half of 2019. (azi)

FINANCE

GOVT’S EXTERNAL DEBT MANAGEMENT PRIORITIZED TO FINANCE DEVELOPMENT : BI

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Such developments showcased a solid structure of Indonesia’s external debt in spite of an uptick in its position.

Greatindonesia.co.id, Jakarta – The government’s external debt management was prioritized to finance development, dominated in productive sectors to drive growth, in addition to boosting public welfare.

Public welfare improvement encompassed the human health & social work activities sector, constituting 19 percent of the government external debt; construction sector, 16.4 percent; education sector, 16 percent; public administration & defense sector, 15.2 percent; and financial & insurance sector, 13.9 percent, according to Bank Indonesia’s (BI’s) statement here on Monday (16/9/2019).

The private external debt rose in line with the investment requirements in several leading sectors.

The private external debt outstanding at the end of July 2019 increased 11.5 percent (yoy), an 11.1 percent yoy rise than that of the previous month.

The increase principally stemmed from the issuance of global bonds by non-financial corporations.

Private external debt was dominated by the financial & insurance sector; manufacturing sector; electricity, gas, & water supply sector; and mining & drilling sector. The share of external debt in these four sectors to the total private external debt reached 76.6 percent.

Indonesia’s external debt maintained a healthy structure, backed by the prudential principle application in its management.

The condition was mirrored in, among others, Indonesia’s external debt-to-gross domestic product ratio at the end of July 2019 at 36.2 percent, down from the previous month.

In addition, Indonesia’s external debt structure continued to be dominated by long-term debt, constituting 87.6 percent of the total external debt.

Such developments showcased a solid structure of Indonesia’s external debt in spite of an uptick in its position.

BI, in close coordination with the government, has continually monitored external debt by promoting the application of prudential principles, in its management to maintain a healthy external debt structure.

Furthermore, the role of external debt will be optimized in supporting development financing without incurring the risks that may impact macroeconomic stability. (akm)

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INDONESIA’S STOCK, BONDS MARKET ATTRACTIVE : INVESTMENT STRATEGIST

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Amidst the current low interest rates, Indonesian bonds are very attractive because they still provide high yields.

Greatindonesia.co.id, Jakarta – The Indonesian stock and bond market remains an attractive option amid the global economic turmoil, an investment strategist at an asset management corporation in Indonesia believes.

“The stock market still provides attractive investment opportunities because of its valuation. There is also the potential growth of the corporation’s profit which is estimated to be around nine percent this year,” the Chief Economist and Investment Strategist Manulife Asset Management Indonesia, Katarina Setiawan, said in a statement received here, Monday (16/9/2019).

Going forward, there are several catalysts for the stock market, including further interest rate cuts by Bank Indonesia, accelerated policy reforms by the government, improved data on economic activity, and corporate tax cuts, she stated.

Amidst the current low interest rates, Indonesian bonds are very attractive because they still provide high yields.

“The central bank’s commitment to safeguarding the Rupiah exchange rate and the bond market provides a positive sentiment for Indonesian bonds,” she said.

Turmoil and volatility in the financial markets are not uncommon, she said advising investors to always keep an eye on every development.

“Keep in mind that there are always opportunities in every condition, even amidst high global volatility. Do not be afraid to invest and adjust your investment portfolio, with targeted investment objectives and time frames,” she said. (INE). (cta)

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RUPIAH WEAKENS OVER CONCERN ABOUT GLOBAL RECESSION

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The Indonesian currency fell 18 points, or 0.13 percent, to close at Rp14.053 per US dollar compared to Rp14.035 earlier.

Greatindonesia.co.id, Jakarta – The rupiah weakened against the US dollar in the Jakarta interbank market on Tuesday evening over fears of a global economic recession.

The Indonesian currency fell 18 points, or 0.13 percent, to close at Rp14.053 per US dollar compared to Rp14.035 earlier.

“The market still has doubts about it and is waiting for certainty about the monetary policy from the meeting of the European Central Bank (ECB) that will be made known Thursday,” PT Garuda Berjangka President Director Ibrahim Assuaibi said in Jakarta Tuesday.

The ECB is expected to slash the deposit interest rate and offer stimulus including the buyback of bonds.

As reported earlier, factories in the European zone particularly Germany are struggling to withstand growth slowdown as a result of the US-China trade war. Hence, ECB President Mario Dragh will not remain silent from attempts to stabilize the European economy.

On the internal side, if the market remains volatile as a result of the trade war and Brexit, the central bank will again intervene in the market through a monetary policy mix to make the market attractive, Ibrahim believed.

“Looking ahead, BI (Bank Indonesia) and the government will continue to encourage the economy, take pre-emptive measures and be vigilant against the global condition and make a policy to facilitate foreign investment in the country,” he said.

The rupiah strengthened Rp14.030 against the US dollar Tuesday morning. Throughout the day, the rupiah hovered between Rp14.026 and Rp14.055. (ctr)

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