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

Deputy Speaker of the Indonesian House of Representatives (DPR RI), 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 recalibrating Indonesia’s engine of growth.

Through this law, she said, Indonesia can strengthen the foundations of financial market deepening and widen access to financing, which has long been a bottleneck for the national economy’s leap forward.

“We are aware that our financial market is relatively shallow compared with our peers in the region. This shallow financial market is highly vulnerable to capital outflows and limited investment instruments, leaving our market illiquid and still dependent on foreign capital,” she explained at the Investment Forum 2026 on Wednesday (15 July 2026).

Sari noted that the current characteristics of Indonesia’s financial market make it highly vulnerable, especially during episodes of global panic or, for example, interest rate hikes in advanced economies.

As a result, when foreign investors withdraw funds en masse from the capital market, prices are immediately distorted significantly.

“These wild price movements trigger panic among other investors, worsening the capital outflow. It does not stop there: when foreign funds are withdrawn massively and converted back into foreign currencies such as the US dollar, the end result is direct pressure on our rupiah exchange rate,” she concluded.

Being aware of these risks, the main mandate of the P2SK Law is expected to safeguard stability and deepen the financial market going forward.

Through the law, long-term financing instruments from the capital market, pension funds and insurance are expected to grow exponentially. This market deepening, in her assessment, is key to ensuring that domestic investment can serve as a strong cushion supporting macroeconomic stability and broadening alternative financing for national development.

“That is why it is important for us to build a coordinated ecosystem among the regulators — the Ministry of Finance, Bank Indonesia, OJK and LPS — which we hope will become increasingly solid and seamless,” she explained.