The Asian Development Bank (ADB) has approved a US$500 million loan to support Indonesia’s effort to expand access to funding for micro, small and medium enterprises (MSMEs) and marginalized groups, such as women and youth.

The loan is part of the multilateral financial institution’s program to promote innovative financial inclusion aimed at helping the government target and track financial inclusion and improve the payments infrastructure, the ADB said in a statement on Wednesday.  It is also expected to strengthen the regulatory framework for digital financial services, data privacy, consumer protection and financial literacy, the bank added.

“The program’s reforms support policy and technology enablers to foster innovations and boost financial inclusion by providing access to formal financial products and services, improving their quality and increasing their use by financially underserved populations,” ADB financial sector specialist for Southeast Asia Poornima Jayawardana said in the statement.

Based on the National Financial Literacy and Inclusion Survey (SNLIK) published by the Financial Services Authority (OJK), the country’s financial inclusion index reached 76.19 percent as of 2019. The figure reflects a significant increase from 67.8 percent recorded in 2016.

Despite the progress, Indonesia still lags behind other Southeast Asian countries, such as Malaysia, which reached 85 percent, while Thailand reached 82 percent.

The ADB program is expected to help the government reach its target of increasing the number of Indonesians using financial products or services offered by formal financial institutions to 90 percent in 2022.

Source: Jakarta Post news