Promoting Financial Inclusion in West Papua: Innovations & Best Practices

West Papua

The people of Indonesia, including West Papua, must begin to recognize financial inclusion.

The public can make more optimal use of financial products and services through easy access to finance.

Innovation of Promoting Financial Inclusion in West Papua

Financial inclusion has a positive and significant impact on the operations and growth of Small and Medium Enterprises.

Innovation and acceleration of the digital economy and digitization are essential for more productive and inclusive growth for Small and Medium Enterprises.

The following are Innovations and Best Practices Promoting Financial Inclusion in West Papua:

1. Through Micro, Small, and Medium Enterprises

Micro, Small, and Medium Enterprises are essential in the Indonesian economy.

With the number reaching more than 99 percent and absorbing more than 97 percent of Indonesia’s workforce, it is closely related to the population’s welfare in Indonesia.

One of the obstacles in developing Micro, Small, and Medium Enterprises is access to finance.

To support local entrepreneurs recovering from the impact of the pandemic, Bank Indonesia implemented strategies and policy innovations targeting low-income groups.

To support low-income communities through strengthening financial inclusion to encourage the productivity of subsistence groups.

Meanwhile, improving the performance of Micro, Small, and Medium Enterprises businesses in West Papua

In dealing with pandemic conditions can be done through digitalization, increasing market access, and increasing access to finance.

Increasing the financial inclusion of Micro, Small, and Medium Enterprises can boost economic growth, job creation, and the effectiveness of fiscal-monetary policies.

2. Through and Understanding Digital

Minister of Finance Sri Mulyani Indrawati said there were several efforts to promote digital financial inclusion and literacy for Micro, Small, and Medium Enterprises.

She highlighted the level of financial inclusion, which still needs to be higher in several Asean member countries.

According to her, providing digital facilities to facilitate Micro, Small, and Medium Enterprises beyond access to financing is essential.

An essential facility in this regard is the low-cost electronic payment system, which will majorly impact business performance.

This system also requires cross-border payment facilities, fast payments, digital remittances, and local currency settlement (LCS).

3. Following Community Consumption Patterns

In the digital era, the payment system is an entry point in a new ecosystem called digital economy and finance.

The development of the payment system in recent years has received support through technological developments, include in West Papua.

Technology can drive the creation of new business models, new players in the industry, changes in consumer behavior, and the transformation of the digital economic and financial landscape.

Consumption patterns are currently changing to online. This case requires fast, easy, cheap, safe, and reliable access to the payment system.

Bank Indonesia also launched the Indonesian Standard Quick Response Code (QRIS) in 2019 to support the digitization of the payment system.

QRIS has developed various features, starting from present merchant mode, non-face-to-face, current customer mode, and cross border.

Through QRIS, it can accelerate the digitization of Micro Enterprises to support an inclusive economy and finance.

4. Digitization for Faster Work

Digital tools bring many significant benefits to companies.

Digitalization can reduce transaction costs for entrepreneurs because it provides faster and better access. Both between staff, suppliers, and networks.

Digitalization can help small and medium enterprises integrate into global markets by reducing transportation and border operations costs and significantly increasing the scope for trade services.

In addition, it can assist in facilitating access to resources, training, and recruitment channels, including government services which are increasingly available online.

The people of West Papua need financial and digital literacy support to use digital financial services to increase economic resilience and productivity.