Financial Literacy Among Youth May Bolster National Economic Recovery

JAKARTADAILY.ID – Retail investors and financially literate may support the economic recovery of Indonesia, but the country is currently more reliant on bank lending activities.

This was said during the LPS-FORWADA Discussion Series 2022, which was held by the Regional Journalists Forum (FORWADA), in collaboration with the Indonesia Deposit Insurance Corporation (LPS) and Opatan Komunika Sejahtera (OK'S Consultant) on Wednesday, July 6, 2022, in Bogor.

In the event, Priyanto Budi Nugroho, Executive Director of Surveillance, Examination, and Statistics of the Deposit Insurance Corporation (LPS) stated that it is currently difficult for Indonesia to maintain economic growth at 5 percent or even higher.

"Given that socio-political conditions at the global level still have a major impact on the pace of domestic economic growth. Therefore, the role of retail and millennial investors is very important in reducing global pressures," he said.

Also Read: Lord Mayor of the City of London Visits Indonesia, Explores Potential Investment in Nusantara

According to Priyanto Budi, the condition of the rupiah exchange rate was already very depressed, approaching Rp 15,000 per US dollar, then the yield on 10-year bonds above 7.6 percent needed to be balanced with non-bank financial markets such as the capital market.

"The role of retail and millennial investors will be important at times like today," he added.

According to LPS data as of May 2022, he continued, demographically, Indonesian capital market investors are dominated by the age group under 30 years old, millennials or younger, which is almost 60 percent or 59.8 percent of the total population in the country.

"This group of investors is quite large, although the funds invested are relatively small, which is around Rp 53 trillion. Meanwhile, the number of investments that come from investors with an age range of 60 years is 27.5 percent or Rp 553 trillion," said Priyanto Budi.

Also Read: IK-CEPA Presents New Opportunities for Economic Growth, Trade, and Investment Between Indonesia and South Korea

Priyanto Budi reminded attendees that although the number of investors at this young age shows that the millennial generation in Indonesia is starting to be investment literate, they must remain vigilant.

The desire to invest must also be accompanied by an understanding of the characteristics of the product so that the selection of financial products can be more appropriate.

“We have to see who the investment organizer is, licensed or not, at least that is. So that millennials can avoid fraudulent investments," said Budi.

On this occasion, Priyanto Budi also gave some tips for saving and investing in the right way. First, cut unnecessary expenses. Second, set aside to save at the beginning of the month, and third, as much as possible separate accounts as needed.