This document discusses financial inclusion and literacy programs in Indonesia. It provides background on Indonesia's economy and financial system, noting that only 20% of adults have formal financial accounts. It then outlines Bank Indonesia's programs to promote financial literacy, especially among micro-entrepreneurs and small- and medium-sized enterprises (SMEs). Surveys found that financial literacy positively correlates with education levels and impacts savings and borrowing behaviors. Bank Indonesia's programs include training modules on financial education and a study showing it leads SMEs to better financial management. The document concludes that financial education should be integrated with SME development, partnerships expanded to reach more groups, and programs replicated nationally to improve financial literacy.

1. Promoting Financial Literacy
for Micro-Entrepreneurs and SMEs
OECD/Thailand Seminar on Financial Inclusion
and Financial Literacy in Asia
Bangkok, 16-17 December 2014
Financial Access and SME Development Department
Bank Indonesia
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2. 2
Outlines
1. Indonesia at Glance
2. Financial Inclusion in Indonesia
3. Financial Literacy: Bank Indonesia’s Programs
4. The Way Forward

3. INDONESIA AT GLANCE
Adults in Indonesia have
account in formal financial
institution
20%
DEMOGRAPHIC
±17.000 islands
±247 M population
±155 M adult people
± 28 M is poor people
± 44% lives in city
FINANCIAL INSTITUTION
120 commercial banks
+ 4.194 rural banks
+187.598 cooperatives
+600.000 MFI (incl. non-formal)
Source: World Bank, 2011
Global Financial Inclusion Index
Source : Bank Indonesia and Ministry of
Finance, processedSource : National Statistic
Bureau-Indonesia, 2012
ACCESS TO FINANCE
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Source: Ministry of Cooperatives and SME
SME’s ROLE IN INDONESIA’S ECONOMY
99.9% of 55
million
business units
absorb around
97,2% of total
labor force.
contribution
around
57,48% to the
GDP
Economic Conditions

4. FINANCIAL INCLUSION IN INDONESIA
4
Save
48%
Don’t
save
52%
74%
5%
3%
2%
5%
6%
5%
Saving only in Bank
Saving only in Non-Bank
Financial Institution
(NBFI)
Saving only in Non-
Financial Institution
(NFI)
Saving in Bank & NBFI
Saving in Bank & NFI
Saving in NBFI & NFI
Borrow
45%
Can’t
Borrow
55%
23%
17%
30%
6%
11%
9%
4%
Borrow only from Bank
Borrow only from Non-
Bank Financial Institution
(NBFI)
Borrow only from Non-
Financial Institution (NFI)
Borrow from Bank &
NBFI
Borrow from Bank & NFI
Borrow from NBFI & NFI
Source: Household Balance Sheet Survey-BI, 2011
S
A
V
I
N
G
B
O
R
R
O
W
I
N
G
Household Saving & Borrowing Behaviour
MSME’s Loan from Banks
7.926.250 9.462.228 10.662.581
39.440.522 38.974.819 39.934.395
9,5%
19,4% 17,8%
20,1%
24,3% 26,7%
0,0%
5,0%
10,0%
15,0%
20,0%
25,0%
30,0%
-
10.000.000
20.000.000
30.000.000
40.000.000
50.000.000
2012 2013 Sep 2014
MSME Loan Accounts Total Loan Accounts
MSME Loan Accounts Growth (% - yoy) MSMS Loan Account Share (%)
MSME Loan Accounts MSME Loan Outstanding
550,4 635,9 709,6
2.725,7
3.319,8
3.592,1
15,7% 15,5% 15,2%
20,2%
19,2% 19,8%
0,0%
5,0%
10,0%
15,0%
20,0%
25,0%
-
500,0
1.000,0
1.500,0
2.000,0
2.500,0
3.000,0
3.500,0
4.000,0
2012 2013 Sep 2014
MSME Loan Outstanding Total Loan Outstanding
MSME Loan Growth (% - yoy) MSME Loan Share (%)
Source: Banks’ monthy report-September 2014, BI

5. FINANCIAL INCLUSION IN INDONESIA
5
THE NEED OF INCREASING FINANCIAL LITERACY FOR SMEs
Financial Education
for SMEs
Financial education is a primary factor on demand side for formal
savings, loans and insurance1.
Financial Literacy Survey (2009)2:
 Society awareness on financial products and services is in line
with education level, and society preference on financial
products is highly affected by the promotion of the products
over the safety guarantee of the savings.
Financial Literacy Survey (2012)3:
 Financial literacy in Indonesia is highly influenced by gender,
age, level of education (positive correlation), risk aversion
(positive correlation), household income, distance from the
house to the bank .
1) Cole S, Sampson T, dan Zia B. 2009. Prices or Knowledge? What Drives
Demand for Financial Services in Emerging Market.
2) Bank Indonesia dan LD-FEUI. 2009. Tingkat Literasi dan Pemahaman
Masyarakat terhadap Produk Keuangan dan Perbankan.
3) Bank Indonsia dan LD-FEUI. 2012. Financial Literacy Survey.
Source: Bank Indonesia survey, 2010
Survey result on impact of financial education for SMEs 
the SMEs become:
 less likely to overcome delayed payment through
banking payment
 more likely to document their income and
expenditure
 more likely to plan expenditure and to separate
business and household finance
 more likely to have better financial management
 Research Period : January 2011 – April 2013
 Number of Respondents : 700 SMEs as borrowers of a Rural Bank, divided into 2
groups : Control and Treatment Group
 Number of Surveys : 1 Baseline survey followed by 2 Follow up surveys
 Type of Intervention : Training on Financial Education
Joint Research BI and ILO

6. 6
BANK INDONESIA’S PROGRAMS
Developing and Implementing Programs and Modules
related to Financial Education
Framework of BI MSME Development
Increasing Access to
Finance
Minimize Asymmetric
InformationStrategy
Coordination &
Strategic Partnership
Capacity Building
The Growth of MSME & Real Sector and Inflation ControlFinal Objective
Supporting food security and creation of new economic centers in the regionsShort Term Objective
• Cluster Development
• Entrepreneurship
Development
• Financial transaction
recording movement
• Strengthening
Financial
Infrastructure
• Facilitation of
Government Credit
Program (KUR, KKPE,
KUPS)
• Provision of
study/research
• Dissemination of
Information
• Development of
MSME Microsite in
the website of Bank
Indonesia
Coordination with
local government,
central government
and international
institutions
Research Training Provision of Facilitation
Information
Programs
Methods

7. Cooperation with
Ministries/Instituti
ons/International
Organization
Financial
Institutions,
Financial Product
and Services
PART OF MSME
DEVELOPMENT
PROGRAM
Financial
Infrastucture
development and/or
facility to promote
financial access for
MSME (eg: SME credit
rating, Government
Credit Programs)
COOPERATION
WITH
STAKEHOLDERS
Financial
Education &
Enterpreneur-
ship for Migrant
Worker
Financial
Education for
MSME &
Entrepreneurs
Financial
Transaction
Recording
Progam
Training for
Trainers
BANK INDONESIA’S PROGRAMS
Implementation of Financial Education
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8. THE WAY FORWARD
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1. Integration of financial education with other SME
development programs.
2. Widening the cooperation and coordination with related
stakeholders to expand the target groups of financial
education.
3. Focus of financial education on Training of Trainers (ToT) 
provide education directly to the community.
4. Replication of financial education program at national level to
improve financial literacy  increase financial capability and
assist the effectiveness of financial inclusion.

9. Thank You
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