President Director of Bank Rakyat Indonesia

The availability of integrated banking access for the communities in remote areas is BRI’s commitment in improving financial inclusion in Indonesia.

ASEAN BUSINESS LEADERS: Can you give an introduction about BRI and what is its focus in the Indonesian market?

SUPRAJARTO: The history of PT Bank Rakyat Indonesia (Persero) Tbk (“BRI”, “Bank”, or “Perseroan”) began in 1895 in Purwokerto, Central Java, by Raden Aria Wiriatmaja, originally to manage mosques’ cash, to be distributed to the public using a simple scheme. Throughout history, various names have been attached to BRI, beginning with “Hulp en Spaarbank der Inlandsche Bestuurs Ambtenaren”, Hulp en Spaarbank der Indlandsche Bestuurs Ambtenareen, Syomin Ginko, and finally, officially established as Bank Rakyat Indonesia on 18 December 1968.

In 1992, BRI changed its legal status to PT Bank Rakyat Indonesia (Persero), and listed its stocks on Jakarta Stock Exchange, now the Indonesia Stock Exchange, on 10 November 2003, with the stock code BBRI.

Since its establishment, BRI consistently focuses on micro, small and medium enterprises (SMEs), and became the pioneer of microfinance in Indonesia. The Bank maintains its commitment until today, and with the support of its experience in delivering banking services, especially in the SME segment, BRI has been able to record the achievement of being the most profitable bank in 13 years in a row.

In other hand, Bank BRI continuously focuses on empowering The MSMEs, while maintaining leadership in the micro business market share. Bank BRI carried out transformation by “upgrading” the capacities and capabilities of MSMEs through the access of loans, digital banking and financial inclusion.

The MSME digitalization is implemented by continuously developing a digital platform such as Indonesia Mall. This service fosters the marketing of MSMEs partners products from across Indonesia to go online. The MSME digitalization is part of BRI’s breakthrough in developing digital banking through the implementation of 6 pillars, namely New Way of Working, Fintech Partnership, Mobile First Strategy, Open API, ChatBot and Innovation Ecosystem.

Bank BRI’s digitalization is supported by satellite technology, where BRI is the sole bank in the world to attain and operate its own satellite, BRIsat.

ASEAN BUSINESS LEADERS: What is BRI’s role to promote inclusive finance in Indonesia?

SUPRAJARTO: Backed by BRIsat satellites network, Bank BRI’s presence is accessible across the archipelago, including in the 3 remote areas (abandoned, isolated, desolated). The presence of BRI in the remote areas aims at providing the integrated financial access of same quality as in the urban areas. The availability of integrated banking access for the communities in remote areas is BRI’s commitment in improving financial inclusion in Indonesia. Bank BRI also continues to penetrate and expand its financial inclusion by developing LAKU PANDAI agents called BRILink agents.

Through BRILink Agents, the communities in remote areas are now able to enjoy banking services without the presence of conventional branches. Until 2nd Quarter 2018, A total of 244,363 BRILink agents are assisting communities across the archipelago to carry out banking transactions just like it’s been conducted in the branch offices. The existence of this BRILink agent contributed to achieving the financial inclusion in 2019.

ASEAN BUSINESS LEADERS: Recently BRI launched its new digital product MYQR: what is the role of fintech in BRI’s strategy and how does it promote innovation in financial products?

SUPRAJARTO: Technology development in the digital age has spawned both technology-based financial and retail companies (fintech and e-commerce). In addition to that, the exponential growth of internet, social media and smartphone users support the business growth of technology-based enterprises both e-commerce and fintech, therefore, disrupting the business owned by the incumbent. This condition requires BRI to transform in terms of business strategy, business proceeding, and culture including in developing and marketing its products and services.

In facing the digital competition, BRI implements 3 (three) key strategies, by determining the key business channel (Key Growth Channel), adjusting how the organization works and its mindset (Organization), and having the important partnership with third parties to accelerate BRI business growth (Collaboration).

BRI foresees a number of challenges in terms of marketing communication activities as digital marketing and the youth segment will continue to grow, BRI adjusts its promotion channels and utilizes social media for effective information dissemination. BRI manages several social media accounts, including @BankBRI_ID on Instagram, @BankBRI_ID, @Kontak_BRI, and @Promo_BRI on Twitter, BRI Facebook page, and Bank BRI YouTube account.

ASEAN BUSINESS LEADERS: GDP growth is expected to be around 5.3% this year. How do you so foresee Indonesia’s economic outlook and the banking growth for 2018-19?

SUPRAJARTO: Given the favorable developments of the domestic economy on the back of recovering global economy and Indonesia’s loan to GDP ratio below 40%, the MSMEs business remains offering ample potential. BRI believes that the banking business in 2018 and 2019 will be similarly promising.

In 2018, Indonesia is hosting a series of important events, such as the regional head election in Java, the Asian Games, and the IMF-World Bank Annual Meeting. In 2019, Indonesia has Legislative and President Election. All These events in 2018 and 2019 could be important impetus for the national economy, creating opportunities and potentially triggering demands for working capital loan, investment, and consumption. However, it is also important to remain vigilant especially with respect to the elections which may cause middle-class customers to hold investments pending safe and smooth elections.

Knowing the potentials, BRI continues to get ready to deliver the Leading MSMEs and Operational Excellence Through Digital Banking in 2018 and Leading Consumer Banking in Indonesia in 2019. BRI focuses on digitizing its loan-related business processes and create other digital-based services for Retail and Corporate segments.

A. In 2018, business development strategies will continue to champion the Micro and Retail business segments, optimizing the marketing of flagship products such as multipurpose loan Kupedes and Briguna, and mortgage product. BRI places its confidence in these sectors as the Government’s economic policies favor the development of the Micro businesses, shown by the increase in KUR to be disbursed by BRI from Rp69 trillion in 2017 to Rp79 trillion in 2018.

B. BRI is expected to balance this focus on loan disbursement, especially in the Consumer and Micro segments, with growth of Third Party Funds (TPF) through effective marketing strategies for the Bank’s leading savings products Simpedes and Britama. The increase in the State Budget appropriation for non-energy subsidy and regional transfer is also expected to contribute to higher volume of savings in the Micro segment, continuing the trend in the last 2 (two) years.

C. However, Indonesia’s financial services sector stability and liquidity has remained solid throughout 2018 and 2019.

ASEAN BUSINESS LEADERS: What are the opportunities to invest in Indonesia, and what is your message of confidence to the international community?

SUPRAJARTO: Robust Macroeconomic Environment
- Inflation is benign supported by improving logistic and infrastructure acceleration.
- Interest rate and exchange rate are stable, benefiting from strong fundamental and positive investor perception in the midst of uncertain global condition.
- Increasing commodity price helped in boosting external position and revenue.
- Indonesia's economy is currently in the process of transitioning. However, Indonesia economy cannot be separated from external conditions (technology, trade, and geopolitics) as well as domestic challenges.
- Deficit realization under 3% of GDP.
- Primary balance surplus is significantly higher than last year, highlighting improving fiscal performance and sustainability that well preserved.

Improve Infrastructure condition
- Infrastructure and connectivity projects to create more sustainable and equitable economic growth in all regions. - Government effort aimed to improve connectivity among the islands and bring down the logistics cost so the prices of basic goods in the outlying islands are becoming more affordable as the result. This will translate to improved efficiencies, thriving regional economies, and lowering the development disparity among the regions.

Sovereign Rating Credit Upgrade and Improving Global Perception for Indonesia
International acknowledgement from various agencies and improving global perception, example: Fitch Rating at December 20, 2017 upgrade Indonesia rating from BBB- to BBB, JCR February 12, 2018 upgrade Indonesia rating from BBB- to BBB, and Moody’s at April 13, 2018 upgrade Indonesia rating from Baa3 to Baa2.

Consistent Government Efforts To Improve Investment Climate :
- Easing Import and Export Restrictions
- Reducing Dwelling Time
- Revising and Perfecting Tax Incentive (Tax Allowance and Tax Holiday)
- Overall structural reform efforts are expected to boost investment and exports to support Indonesia's economic growth in the medium term.