No Separate Handling Needed for Financial Conglomerate

The World Bank in a September 2019 presentation entitled "Global Economic Risks and Implications for Indonesia" revealed its assessment of the Indonesian economy. In terms of financial system resilience, the World Bank assessed that Indonesia is generally resistant to shocks. However, there were some critical notes on the handling of financial conglomerates and the insurance sector weakness. The World Bank highlighted two cases of default experienced by two large Indonesian insurers, Asuransi Jiwa Bersama (AJB) Bumiputera and Jiwasraya.

The World Bank said Indonesia must maintain its financial system credibility by coping with insurance sector weakness. World Bank estimates seven million people with more than 18 million policies were involved in the default case; most of them are low and middle-income people. As for the financial conglomerate, the World Bank considers the need for increased risk visibility by assessing the health and resilience of the conglomerate, as it represents 88 percent of banking assets.