24 Aug, 2023

ASEAN Fest 2023: Public Education about ASEAN Chairmanship 2023

The general public, an integral part of ASEAN's progress, can take pride in Indonesia's Chairmanship of ASEAN in 2023. ASEAN Fest 2023 is an inclusive event that offers the community an opportunity to comprehend and appreciate this momentum. Organized by Bank Indonesia (BI) at the Jakarta Convention Center (JCC) from August 22-25, 2025, ASEAN Fest serves as a concurrent event to the second ASEAN Finance Ministers and Central Bank Governors Meeting (AMFGM) in 2023. It extends an invitation to the community to gain knowledge and immerse in the spirit of ASEAN 2023 through various activities including seminars, the "ASEAN Village" as a hub for cultural education, showcasing the traits and cuisines of all ASEAN nations, an ASEAN meeting museum, as well as exhibitions of SMEs and a financial inclusion festival.

"We, as all ASEAN countries, are a family, and that's what makes ASEAN significant. This forms the essence of ASEAN Fest 2023. Let's gather here each day (until August 25, 2023). Experience the cultural exhibitions of all ASEAN countries, participate in seminars, and engage in talk shows about ASEAN," Perry Warjiyo, the Governor of Bank Indonesia, urged during the inauguration of ASEAN Fest 2023. This call was succeeded by an invitation for ASEAN delegates to explore the ASEAN Village. The event buzzed with contemporary and traditional entertainment, along with school-level competitions.

As part of ASEAN Fest, the Digital Financial Inclusion (DFI) Festival is taking place, an outcome of Indonesia's Chairmanship Priority Economic Deliverables for ASEAN 2023. The DFI Festival's objective is to spotlight ASEAN's policies, best practices, and endeavors in advancing digital financial inclusion to support sustainable economic growth, while elevating public awareness of the significance of digital financial literacy. This encompasses activities such as exhibitions and seminars.

On the inaugural day of ASEAN Fest, two seminars unfolded: a High-Level Policy Dialogue titled "Frameworks for Integrated Policy: Experiences and the Way Forward," in collaboration between Bank Indonesia (BI) and the Bank of Thailand (BoT), and an International Symposium titled "Digital Financial Literacy to Promote Financial Inclusion." This symposium also marked the launchpad for educational resources on digital financial services, stemming from the collaboration between BI, the Financial Services Authority (OJK), with technical support from the World Bank.

During the first seminar, the prominence of policy mix in embodying ASEAN's global leadership was underscored. Governor Perry Warjiyo highlighted that ASEAN's policy mix implementation, including exchange rate interventions, capital flow management, and macroprudential policies amidst global uncertainties, has positioned ASEAN as a reference point. Indonesia's effective implementation of an economic policy mix, rooted in a robust conceptual framework and policy makers' collaboration through open dialogues, stands as evidence in maintaining economic stability amidst global challenges.

Simultaneously, Governor Sethaput Suthiwartnarueput of the Bank of Thailand (BoT) shared Thailand's experiences and challenges in implementing an economic policy mix. Acknowledging the formidable challenges in policy mix implementation, Governor Sethaput emphasized the necessity of robust coordination among policy makers for effective policy implementation. He emphasized the flexibility of operationalizing policy mix to match each country's circumstances and readiness.

Likewise, Deputy Governor of the Bangko Sentral ng Pilipinas, Francisco G. Dakila, emphasized the importance of optimizing a policy framework that harmonizes various policy instruments to balance the interplay of implemented policies. Francisco stressed the significance of maintaining communication given the multi-objective nature of policy mix. In the subsequent session, the discussion delved into the operationalization of an optimal policy framework to enhance policy mix integration. It was also emphasized that inflation can no longer be the sole indicator of economic expansion, hence the application of policy mix, supported by technology, to bolster economic modeling. Policy implementers should also exercise professional judgment in its application. Looking ahead, policy mix discussions within ASEAN will be further reinforced and deliberated in meetings involving Finance Ministers and Central Bank Governors.

Transitioning to the international symposium centered on financial literacy, Deputy Governor of BI, Juda Agung, presented four success stories from Indonesia that demonstrate the positive outcomes of digital financial inclusion. These stories encompass the expansion of marketing reach, the fostering of entrepreneurship and heightened productivity among SMEs through e-commerce, the efficiency enhancement of SME transactions coupled with reduced reliance on cash via digital payments like QRIS introduced by BI, the role of fintech lending in surmounting SME financing obstacles and driving business expansion, and the digitalization of bookkeeping and accounting facilitated by BI's SIAPIK (Financial Information Application System), enabling SMEs to seamlessly and securely generate standardized financial reports digitally.

Given the pivotal role of digital financial literacy, Deputy Governor Juda outlined three strategies to fortify digital financial literacy. These strategies encompass establishing an extensive, structured, and targeted framework for digital financial literacy, bolstering consumer safeguards, and fostering synergistic collaboration among governments, regulators, financial service providers, academics, and the broader public.

Esteemed speakers in these seminars included Pierre-Olivier Gourinchas (IMF), Mr. Claudio Borio (BIS), Assistant Governor Bank of Thailand, Piti Disyatat, Deputy Commissioner of OJK, Friderica Widyasari, Head of the Department of Monetary Economic Policy at BI, Firman Mochtar, Head of the Department of SME Development and Consumer Protection at BI, Yunita Resmi Sari, Aman Santosa (OJK), Bianca Isainsu (OECD), Francesco Strobbe (World Bank), and Arga M. Nugraha (Bank Rakyat Indonesia).

Anticipation was high for the multitude of seminars aligned with ASEAN's 2023 economic focus at ASEAN Fest, alongside a diverse array of educational activities. Further details about ASEAN Fest can be obtained by downloading the provided booklet:

https://www.bi.go.id/id/ASEAN-2023/Documents/E-Booklet-Acara-ASEAN-Fest.pdf

29 Aug, 2023

Vietnam Bolsters Regional Financial Links through Connectivity Payment Initiative

On August 25, 2023, Vietnam, through its central bank, the State Bank of Vietnam (SBV), officially joined the Regional Payment Connectivity (RPC) initiative. The RPC initiative was initiated by the central banks of Indonesia, Singapore, Thailand, Malaysia, and the Philippines during the G20 Summit in 2022 to develop and enhance inclusive cross-border payment systems in Southeast Asia, such as using QR-code payments.The partnership aims to support the post-pandemic recovery of countries in the region with a specific aim to benefit micro, small, and medium-sized businesses (MSMEs). MSMEs are the dominant form of business enterprise in Southeast Asia, accounting for between 88 to 99 percent of all businesses as well as approximately 70 percent of total employment.Regional Payment Connectivity Initiative can increase financial inclusion in VietnamThe RPC initiative can help increase financial inclusion in Vietnam. Despite some 70 percent of the adult population owning a bank account, they are severely underbanked with more than half lacking access to credit.Meanwhile, the ASEAN-5—Indonesia, Singapore, Thailand, Malaysia, and the Philippines—have inked agreements to link their QR code payment systems. This will enable, for example, Indonesian consumers to pay for goods or services in Thailand by scanning Thai QR codes. Thai consumers can also use their mobile applications to scan the Quick Response Code Indonesian Standard (QRIS) when buying products or services in Indonesia.Further, the RPC initiative will help benefit Vietnam’s digital economy, which had a gross merchandise value (GMV) of US$23 billion in 2022. This is expected to increase to between US$120 billion to US$200 billion by 2030. E-commerce transactions are set to drive this growth which had a GMV of US$14 billion in 2022 and is predicted to reach US$32 billion by 2025.As such, QR codes can encourage Vietnamese MSMEs to develop more cashless payment options, particularly since most MSMEs are in the informal sector—according to World Economics, Vietnam’s informal sector was valued at US$315 billion at GDP PPP levels.  Barriers to financial inclusion in Southeast AsiaCash is kingAs most Southeast Asian MSMEs are in the informal sector, they pay wages in cash, especially in rural and low-income communities. Without bank account records, many Southeast Asian MSME firms and their employees do not have credit histories, and this hinders their ability to access financial services, such as business loans or mortgages.Financial literacyLow levels of financial literacy are impacting the low adoption rate of financial services in Southeast Asia. Financial literacy is around 30 percent of the region’s adult population—lower than the global average.The importance of mobile phonesMore people in Southeast Asia have a mobile/cell phone than a bank account. The mobile phone is thus key to achieving financial inclusion in the region as it enables users to access mobile wallets, which are linked to QR codes.Some of the most used digital wallets in Southeast Asia are GrabPay, GoPay, OVO, MoMo, and PayFazz. Through these digital wallets, consumers can conduct online transactions without having a bank account. Moreover, as more consumers and businesses use these digital wallets, more data gets generated around their financial behavior and consumer trends. Financial institutions will then be able to tailor the type of financial products offered to this demographic.For foreign investors in the e-wallet industry, it is essential that they deliver a customer-centric experience to allow customers to pay with the local payment method of their choice, ranging from mobile banking to payments via convenience stores.P2P lendingMany MSMEs in Southeast Asia have business models that are not compatible with the characteristics of the financial products offered by banks and other financial institutions. That includes aspects, such as payment terms for loan schemes, forms of collateral, and credit quality, among others.Peer-to-peer (P2P) lending is one financing model that has the potential to serve the region’s underbanked and unbanked population. In Indonesia for instance, there are already over 160 officially registered fintech companies that offer P2P lending services, which was valued at over US$7 billion in 2020. These microloans are becoming increasingly popular as they take a short time to be disbursed (less than 24 hours), with the amount usually being less than US$100. Furthermore, the terms and maturity of the loans are also small and short, being repaid within a few weeks.

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23 Aug, 2023

Indonesia’s ASEAN Chairmanship: Seizing the Opportunity to Bridge the Digital Divide

Indonesia's Leadership as ASEAN Chair in 2023 presents a critical juncture to tackle the digital divide prevalent in the Southeast Asian region. Minister of Communications and Informatics, Budi Arie Setiadi, elucidated that Indonesia, in its role as the ASEAN Chair, is proactively addressing pertinent digital concerns, aiming to realize the vision of the ASEAN Digital Community 2040."Our focus on bridging the digital divide encompasses strategic governmental initiatives such as the Palapa Ring project, fostering the development of digital human resources, and safeguarding personal data in line with the Personal Data Protection Law," remarked the minister during a seminar titled "Strengthening the Epicenter of Growth through ASEAN Digital Connectivity," organized for the LXV Regular Education Program (PPRA) by the National Resilience Institute (Lemhannas), held at the Communications and Informatics Ministry (MCIT) Office in Central Jakarta on Tuesday, August 22.Minister Budi Arie noted that ongoing ASEAN negotiations are centering around several Framework Agreements, including the ASEAN Framework on Personal Data Protection, the ASEAN International Mobile Roaming, and the ASEAN Digital Data Governance Framework."The disparities in digital access and technology capabilities among ASEAN nations, such as variations in internet speed, usage, and technological production, cannot be disregarded," he emphasized.Beyond the introduction of these frameworks, Minister Budi Arie expounded on ASEAN's initiatives in nurturing digital talent through annual programs."Examples encompass the ASEAN Cyber-Kids Camp, a recurring event since 2009, the ASEAN ICT Innovation Award, which debuted in 2011, the ASEAN Makers Hackathon initiated in 2017, and the ASEAN-Japan Cyber SEA Game, commenced in 2018," the minister explained.Elaborating further, Minister Budi Arie affirmed that these challenges will take center stage in various scheduled meetings orchestrated by the Ministry of Communications and Informatics, such as the ASEAN TFFN Meeting, the ASEAN GSMA Workshop, the Digital Economy Supply Chain Workshop, and the ATRC – ADGSOM Meeting, presently being convened in Bali."Our imperative lies in translating intentions into tangible actions that reverberate across the ASEAN landscape. This is an opportune moment for the digital economy to substantively contribute to the region's economic advancement," underscored the minister, echoing a sentiment previously articulated by Kao Kim Hourn, the ASEAN Secretary-General.

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