Digitalization Increases Economic Productivity

JAKARTA, 2 February 2022 – Digitalization has given rise to various new opportunities that can be utilized to increase financial inclusion for MSMEs. The availability of financial access and services that are easily accessible to MSMEs is one of the significant factors in increasing MSMEs’ productivity and resilience to economic turmoil. This was conveyed by the Deputy Governor of Bank Indonesia (BI), Doni P. Joewono, in the International Seminar on Digital Financial Inclusion which is a side event of the 1st G20 Global Partnership for Financial Inclusion (GPFI), held today (Feb. 2), virtually. This seminar brought speakers who represented the regulator including Indonesia’s Financial Services Authority (OJK), the World Bank, and the Better Than Cash Alliance (BTCA), as well as the industry, namely Indonesia’s technology company GoTo and India’s digital financial inclusion platform Avanti Finance. Discussions in the seminar have brought together views from regulators and the industry on issues and obstacles that arise in the efforts to accelerate digital financial inclusion to encourage economic inclusion.

Digital financial inclusion is one of the priority agendas of Indonesia’s G20 Presidency in 2022. By utilizing digitalization, financial inclusion can be promoted to increase sustainable economic productivity and inclusiveness, especially in the MSME group including MSMEs owned by women and young people.

Furthermore, Doni P. Joewono conveyed that technological advances, digitalization of financial products and services, and online business activities can support MSMEs in maintaining revenues and business amidst the Covid-19 pandemic. Indonesia’s MSMEs have been able to adapt quickly and switch to digital-based businesses. A Bank Indonesia survey in 2021 revealed that 20% of Indonesian MSMEs were able to mitigate the impact of the pandemic by digitizing their businesses and utilizing online marketing media. Data on supply side shows that the adoption of non-cash transactions such as debit cards and electronic money has experienced a rapid increase, as reflected in the December 2021 QRIS transactions value which reached Rp27.7 trillion (or an increase of 237% per year).

The seminar discussed the importance of maintaining a balance between promoting innovation in digital financial services to increase financial inclusion and managing potential risks. The balance between innovation and risk mitigation is in line with two of the ten principles outlined in the G20 High Level Principles on Digital Financial Inclusion which was launched in 2016.

The agenda of Indonesia’s G20 Presidency related to financial inclusion in 2022 will focus on Digital Financial Inclusion and SME Finance, which is based on the G20 Financial Inclusion Action Plan (FIAP) 2020 and supports the theme of Indonesia’s G20 Presidency “Recover Together, Recover Stronger”. The development of MSME becomes one of the main issues with a focus on utilising digitalization to increase productivity, stability, and economic inclusiveness for MSMEs, especially those owned by women and young people.

This international seminar was attended by the international and domestic communities who represented Ministries/Institutions, regulators, academics, international organizations, associations, and the general public.***

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