Keynote Speech
International Workshop on Credit Reporting System
"Strengthening CRS in Indonesia:
Role, Challenge, & Future Development"
Bismillahirrahmanirrahim,
Distinguished Speakers,
a) Mr. Yudi Permana, Head of Licensing and Banking Information
Department, Otoritas Jasa Keuangan;
b) Ms. Fredesvinda Fatima Montes, Senior Financial Specialist; World Bank
Group;
c) Mr. Humberto Panuco Laguette, Senior Economist in Directorate of
Financial System Analysis, Banco de Mexico;
d) Ms. Megan Cox, Bureau of Consumer Protection, Federal Trade
Commission, USA;
e) Ms. Teh Sew Mei, Deputy Registrar in Registrar Office of Credit Reporting
Agencies, Ministry of Finance, Malaysia.
Distinguished Ladies and Gentlemen,
Assalamualaikum warahmatullahi wabarakatuh,
Very good morning to all of you,
1. Allow me to begin by thanking Allah SWT who has blessed us with the
opportunity to rare but beneficial event. I would like to express my
sincere gratitude towards our distinguished speakers who have travelled
a long way to be with us today. On behalf of Bank Indonesia, I would
like also to take this opportunity to express my appreciation to World
Bank for arranging the speakers to join this event.
Ladies and gentlemen, < Overview of Credit Reporting System >
2. We have witnessed the transformation of credit reporting system in
Indonesia. Since 1969, Bank Indonesia has been collecting information
from regulated entities and managing the credit reporting system. In
June 2006, Bank Indonesia has launched Debtor Information System
(SID) that gather positive and negative information on both individual
and business, provided by banks and other creditors. With the
establishment of the SID, the growth of Non-Performing Loan (NPL) can
be prevented and financial system stability can be maintained.
3. Between 2010-2016, Indonesia has made structural reform including
simplified rules and regulations to support Ease of Doing Business. In
2010, BI has developed basic report which contains historical credit
information for the last 24 (twenty four) months, called Historical
Information Individual Debtor (Informasi Debitur Individual
Historis/IDIH).
4. In 2013, Bank Indonesia enacted BI Regulation concerning Credit Bureau
(LPIP) that covers certain aspects of credit bureau operations, especially
on the LPIP licensing and the transfer of SID data to licensed credit
bureaus (LPIPs). With this regulation, Indonesian management of credit
reporting system is transforming, from single credit reporting to dual
credit reporting, that synergize Public Credit Registry operated by BI,
with Private Credit Bureaus.
5. Indonesia EoDB's indicator of improvement reflected by rating upgrades,
which is in 2011 Indonesia rating was 126 then in 2016 upgrade to 109.
The rating upgrades supported by Getting Credit aspect - Depth of
Information Index rating which is in 2011 Indonesia rating was 116 and
in 2016 upgrades to 70.
6. Based on OJK Law, since December 2013, the authority of Credit
Reporting System has been transferred from Bank Indonesia to Otoritas
Jasa Keuangan. Both Bank Indonesia and Otoritas Jasa Keuangan
realized that the transfer process wouldn't be easy and need
preparations. Bank Indonesia and Otoritas Jasa Keuangan were agreed
to collaborate and to share the responsibilities during certain time of
transition period.
Ladies and gentlemen, <The Background of the Workshop>
7. The Workshop on Credit Reporting System (CRS) is held in cooperation
between Bank Indonesia, the Indonesia Financial Services Authority
(OJK), and the World Bank under the framework of the Financial
Inclusion Support Framework Program (FISF); a multiyear program to
support Indonesia in enhancing financial inclusion, start from 2015.
8. In this opportunity, please allow me to reveals the conditions we face
today as the basis and background of why we need to support FISF
program.
9. Based on Doing Business survey in 2015, World Bank, with assumption
that data in credit registry reflects number of adult that have access to
finance, then number of adult in Indonesia that have access to finance
only 68% from total adult population or 82,2 billion from 120,8 billion
people. A similar situation faced by the SME sector which is based on
data from the Ministry of Cooperatives and SMEs in 2013 amounted to
more than 57.8 million units. From that number, only 10 million units or
around 17% of them are able to access to finance.
10. In general, financial institutions in Indonesia had asymmetric information
and had struggled to identify potential credit risk and creditworthiness
for both the individual and the MSME sector. As the result, the credit
interest rate charged to them tends to be high because of the high risk
premium.
11. One component of the FISF program is Credit Reporting System (CRS).
With the CRS, it is expected that the classic problem of asymmetric
information that has become the critical issue in the provision of funds,
can be solved. With the CRS, the financial institutions are able to know
and analyze the profile of prospective debtors, can assess possible risks,
can streamline the cost, can lower NPL and create sound credit culture.
In the end, it will support the financial inclusion, and support the
ultimate goal of macro economy, namely financial sector stability and
economic growth.
Ladies and gentlemen < The Purpose of the Workshop >
12. In September 2013, World Bank issued The General Principles of Credit
Reporting (GPCR). The GPCR intends to provide an international agreed
framework in the form of international standards for credit reporting
systems' policy and oversight. These Principles suggest the key
characteristics that should be satisfied in order to ensure that credit
reporting systems are safe, efficient and reliable.
13. As part of FISF Indonesia program, an assessment against the
implementation of General Principles of Credit Reporting (GPCR) in
Indonesia was conducted in 2015, involving associations, financial
institutions, public utilities institutions, and the relevant authorities. The
assessment found that there are some critical issues that need to be
addressed by Indonesian authorities, which includes legal gaps,
oversight function and consumer protection aspects.
14. This workshop is expected to provide knowledge about the current
condition, the development, and challenges of the implementation of
CRS in Indonesia while learning from the experience of other relevant
countries. Such knowledge will provide input to the authorities in
defining implementable actions on the management of CRS in line with
the GPCR.
Ladies and gentlemen,
15. Before closing my speech, I would like to give thanks to the committee
which have thoroughly initiated and prepared such a great event.
I would also like to thank all the speakers and partcipants for the
willingness and enthusiasm to participate in this event.
16. With that final note, I hope this event provides us with an understanding
of the role and contribution that we can give in order to implement the
GPCR, particularly with regards to the Indonesian context. I strongly
believe it will be beneficial for the industry and related authorities.
Henceforth, I would like to invite all of us here to share thoughts in what
I hope would be a spirited discussions filled with fruitful conclusions. May
Allah bless and lighten our steps forward. Thank you.
Erwin Rijanto
Deputy Governor