The Center for Economic & Financial Development (CEFD), established by the Indonesian Business Council (IBC), is committed to overcoming the barriers that impede Indonesia’s financial advancement and sustainable economic growth. CEFD focuses on expanding knowledge, fostering strategic partnerships, and promoting innovation within the economic and financial sectors. With a strong emphasis on enhancing competitiveness and ensuring inclusive development, CEFD strives to build a more robust, equitable, and prosperous Indonesia. Through its comprehensive initiatives in policy research, advocacy, and capacity building, CEFD plays a crucial role in shaping the nation’s economic future.
ECONOMY
Welcome to
Center for
Economic & Financial
Development
Enhancing Financial Development for Strong and Equitable Growth
Paving the Way for a Robust Financial Sector
Policy Research and Advocacy
Knowledge Sharing and Capacity Building
Collaboration and Partnership
“A key barrier to Indonesia’s economic advancement is the limited depth, access, and efficiency of finance for businesses, particularly Small and Medium Enterprises (SMEs). The Indonesian Business Council (IBC) highlights this as a major hindrance to business competitiveness and investment growth. Overcoming these financial obstacles is also crucial for avoiding the middle-income trap.” – Sofyan Djalil
IBC’s Initiation for CEFD includes…
10+
Policy Papers & Reports
20+
Knowledge Sharing and Capacity Building
15+
Collaboration and Partnership
Financial Development for Strong and Equitable Growth
The Indonesian Business Council (IBC) embarked on a comprehensive research study to identify strategic policy recommendations aimed at enhancing financial access, inclusivity, and competitiveness in Indonesia’s financial sector. The overarching goal of this research initiative was to bolster the efficiency and stability of Indonesia’s financial landscape, thereby fostering sustainable economic growth and development. The research encompassed seven key policy areas that were deemed essential for improving financial development in Indonesia such as financial product innovations, tax reforms, advancement of non-bank institutions, enhancement of credit information and collateral regulations, support for bank consolidations, fiscal and macroeconomic management and NPL management improvement through Asset Management Companies (AMCs).
The study underscored the importance of evidence-based policymaking, stakeholder engagement, and empirical studies to refine and implement these policy recommendations effectively. By addressing these structural challenges and implementing the proposed policy measures, Indonesia aims to enhance its financial competitiveness, attract more foreign investments, reduce borrowing costs, and promote sustainable economic growth. This holistic approach is crucial for overcoming the barriers to financial development and advancing Indonesia’s position in the global economic landscape.
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Indonesia ranks among the lowest in ASEAN in terms of broad money (M2) to GDP ratio, indicating the shallowness of its financial sector. Key challenges include over reliance on traditional funding sources, insufficient regional financial capacity for public services, unmonetized property assets, and inadequate financing for Micro, Small, Medium Entreprises (MSMEs). To address these issues, innovative financial products are critical: (i) Project Finance Bonds for long-term infrastructure projects, (ii) municipal bonds to fund regional development, (iii) Real Estate Investment Trusts (REITs) to unlock property value; and (iv) partial guarantee schemes to expand support for MSMEs.
Indonesia’s MSMEs face significant barriers to accessing credit, primarily due to the “missing middle” phenomenon, where they are too large for microfinance but too small and risky for formal financial institutions. Key issues include reliance on traditional collateral, insufficient and fragmented credit information systems, poor credit ratings due to rigid assessments, and low financial and digital literacy among MSMEs. To address these challenges, the paper recommends (i) diversifying collateral assets, such as movable property and intellectual property, (ii) enhancing credit information systems, (iii) improving the credit rating system, and (iv) increasing financial and digital literacy.
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Events
Indonesia Economic Summit 2025
IES is a high-level forum designed to bring together international business leaders, policymakers, thinkers, and industry champions. The forum will explore Indonesia's current and future economic development, and how it...
Fellows
Kahlil Rowter, S.E., M.A.
Senior Fellow
Prof. Dr. Telisa Aulia Falianty, S.E., M.E.
Senior Fellow
Adelia Surya Pratiwi, S.E., M.Sc.
Fellow
Citra Handayani Nasruddin, S.Sos, M.P.A
Fellow
Alifa Salsabila, S.T.
Fellow
