Financial Services Authority, June 17th, 2014: During this reporting period, OJK actively maintained the stability of financial services sector through its policies. It appeared in the economic indicators that showed positive trend. Economic growth in Indonesia for first quarter of 2014 (Q1 2014) reached 5.21%. Rupiah exchange rate started to get strong by 7% until end of Q1 2014, and that was the biggest intensification among emerging market countries such as Turkey, Brazil, India and South Africa, which all share similar challenges.

In banking sector, the Fed`s gradual cut back on liquidity stimulus has driven deceleration in the growth of banking capital resource. However, performance of banking sector was generally quite good compared to previous quarter. That was indicated by high capital adequacy ratio (CAR) at 19.8% and low non-performing loan (NPL) at 1.9%. Relatively sufficient provisioning carried out by banking industry has resulted net NPL in banking sector to stay stable at around 0.9%.

Such economic and capital market conditions have influenced domestic capital market performance. Indonesian composite index (IHSG) at Indonesia Stock Exchange during Q1 2014 increased by 11.56% with a closing at 4,768.28. As index intensified, stock capitalization rate also increased to Rp 4,717.5 trillion. The positive implication impacted bond market, which also experienced a hike, particularly government bonds market. Government bonds yield for five-year period experienced a decrease compared to previous quarter. Other investment products such as mutual fund also increased, resuming the trend in previous quarter. Total amount of mutual fund net asset value (NAV) in this quarter increased by 7.45% to Rp 206.32 trillion. Performance of non-bank financial industry (which covers insurance, finance companies, other financial services institutions, and Sharia non-bank financial industry) still recorded positive business growth and financial performance in general. Total assets of non-bank financial industry in the end of Q1 2014 increased by around 4.29% compared to previous quarter to 1,391.21 trillion. This increase was contributed from increase of assets in insurance, pension fund, finance companies and special financial services institutions.
 
To follow up previous year`s programs in regulation section, OJK developed a regulation framework which ensures harmonization and synergy among all three financial services industries. Similar measure was also implemented in banking, capital market and Sharia-based non-bank financial industry in order to accommodate industrial dynamics, to response upcoming challenges, and to consolidate OJK organizational governance. Within this reporting period, OJK has issued seven regulations associated with non-bank financial industry, education and consumer protection, and OJK levy.

In Q1 2014, OJK has implemented a range of measures to optimize sustainable supervision and regulation over banking industry, capital market and non-bank financial industry. Among others were the establishment of integrated supervision working unit, crises simulation, formulating blue print of information system for Risk-Based Supervision, and preparing infrastructures to support the implementation of Risk-Based Examination (RBE) guidance for conventional commercial banks and assessment on level of bank soundness for Sharia banks or Sharia Risk-Based Bank Rating.

In order to provide satisfactory protection for consumers and society, OJK has developed Consumer Service System sustainably. Among the efforts were by carrying out several completions in the Integrated Financial Customer Care (IFCC) program. Additionally, OJK also continually arranged socialization events in relation with education and consumer protection for all levels of society. As for dispute resolution, OJK has developed an alternative dispute resolution agency in financial services sector. OJK believes that with hard work, smart work, and supports from all stakeholdersparticularly Bank Indonesia, government, and House of Representatives, OJK will be able to reach the goal of realizing financial services industry as a national economy pillar that has global competitiveness and able to promote general prosperity.