Denpasar, Indonesia, October 13, 2018
—IFC, a member of the World Bank Group, has signed a Memorandum of Understanding with Sumitomo Mitsui Banking Corporation (SMBC) and Bank Tabungan Pensiunan Nasional (BTPN) to promote financial inclusion and green financing in Indonesia. The aim is to address gaps in economic growth, promote sustainability, and support one of the country’s key development goals of creating jobs.
The largest economy in Southeast Asia, Indonesia has charted an impressive economic growth and has the potential to become the seventh largest economy in the world by 2030. However, the role of micro, small and medium enterprises is crucial to achieve this target. While MSMEs account for 89 percent of the private sector workforce—and 60 percent of the country’s GDP—they remain largely untapped with limited or no access to finance.
According to a study commissioned by IFC in 2016, the MSME financing gap in Indonesia is $11 billion annually. With this collaboration, IFC intends to help address the financing gap through the development of Supply Chain Financing as viable and replicable models to increase outreach in the MSME markets.
In addition, IFC—along with SMBC and BTPN—aims to promote sustainable economic growth through the development of green financing. Similar to other emerging markets, Indonesia too, needs to manage growth without compromising on sustainability. Climate change impacts and natural degradation could cost Indonesia 2.5 percent to 7 percent of its GDP annually.
Indonesia is the fourth most populated country in the world and the fourth largest greenhouse gas emitter, after the United States, China, and India. As part of the global effort to arrest climate change, the country has pledged 29 percent reduction in greenhouse gas emissions by 2030 under the Paris agreement.
“We are excited to pursue collaboration with SMBC and BTPN to address two very important issues in Indonesia – access to finance and climate change. IFC have partnered with BTPN for almost a decade and have witnessed the tenacity and commitment of the BTPN towards financial inclusion. We also commend SMBC’s leadership in the region in addressing climate change, being the first Japanese bank to issue green bond. We believe this collaboration can deliver a meaningful impact and will go a long way in promoting green financing and addressing financial inclusion gaps through supply chain financing in Indonesia” says Paulo de Bolle, IFC’s Global FIG Senior Director.
The World Bank Group has taken on an ambitious goal of universal financial inclusion by 2020, which aims to mobilize private sector funding to address Indonesia’s shortage of loans to MSMEs. Since 1968, IFC’s investments, including funds mobilized in Indonesia, stand at $7.7 billion.
Also, IFC is one of the world’s largest financiers of climate-smart projects for developing countries. Since 2005, IFC has invested $18.3 billion in long-term financing from its own account, and mobilized another $11 billion through partnerships with investors for climate-related projects.
About IFC
IFC—a sister organization of the World Bank and member of the World Bank Group—is the largest global development institution focused on the private sector in emerging markets. We work with more than 2,000 businesses worldwide, using our capital, expertise, and influence to create markets and opportunities in the toughest areas of the world. In fiscal year 2018, we delivered more than $23 billion in long-term financing for developing countries, leveraging the power of the private sector to end extreme poverty and boost shared prosperity. For more information, visit
www.ifc.org
Stay Connected