DPR Says P2SK Law Will Recalibrate Indonesia's Economic Growth Engine

Deputy Speaker of the Indonesian House of Representatives (DPR), Sari Yuliati, has stated that the Financial Sector Development and Strengthening Law (UU P2SK) is not merely a regulation but a manifestation of a grand vision to recalibrate Indonesia’s economic growth engine. Speaking at the Investment Forum 2026 on Wednesday (15/7/2026), she explained that the law aims to strengthen the foundation for financial market deepening and broaden access to financing, which has long been a bottleneck for the nation’s economic leap. “We have long realised that our financial market is relatively shallow compared to our peers in the region. A shallow financial market is highly vulnerable to capital outflows, has limited investment instruments, making our market illiquid and still dependent on foreign capital,” she said. Sari noted that the current characteristics of Indonesia’s financial market make it highly susceptible, especially during global panic or when interest rates rise in developed countries. Consequently, when foreign investors withdraw funds en masse from the capital market, it directly distorts prices significantly. “This wild price movement triggers panic among other investors, worsening the capital outflow. It does not stop there; when foreign funds are massively withdrawn and exchanged back into foreign currencies, such as the US dollar, it ultimately puts direct pressure on our rupiah exchange rate,” she concluded. Recognising these risks, the primary mandate of the P2SK Law is expected to maintain stability and deepen the financial market going forward. Through this law, it is hoped that long-term financing instruments from the capital market, pension funds, and insurance can grow exponentially. This market deepening is considered key to ensuring domestic investment can act as a strong cushion to support macro stability and expand alternative financing for national development. “Therefore, it is important for us to build a coordinative ecosystem among regulators, including the Ministry of Finance, Bank Indonesia, OJK, and the Deposit Insurance Corporation, which we hope will become increasingly solid and seamless,” she stated.