Policy Brief
Bank Rakyat Indonesia (BRI), Indonesia People’s Bank, has been the most successful promoter of financial inclusion in Indonesia since the country declared independence in 1945.
BRI’s first major financial inclusion initiative was the 1970 creation of a nationwide network of BRI “unit desas,” or village units, for channeling Bimas (Mass Guidance) agricultural credit. The primary objective of Bimas was to promote national self-sufficiency by bringing the Green Revolution to Indonesia. However, by the 1983–84 planting season, successful rice farmers no longer needed Bimas support, leaving only marginal and failing farmers in the program.
BRI thus began its microbanking metamorphosis and rebirth with painful adjustment and slow adaptation, subsequently laying the foundation for dramatic growth and rapid expansion. Three principal policy changes turned unit desas from marginally useful, extremely costly entities that had outlived their initial mission into profitable rural banks providing vital financial services: 1) transformation of unit desas from Bimas conduits to full-service rural banks; 2) internal treatment of unit desas as semi autonomous units of account (discrete profit/loss centers); and 3) evaluation of unit desas based primarily on their profitability rather than on hectares covered or money lent. BRI has built on its successful commercialization of microbanking in the mid-1980s to grow, broaden, and deepen its microbanking business over the past three decades.
BRI faces two significant future challenges if it is to remain a profitable and effective global leader and national driver of financial inclusion. First, it must continue to evolve and adapt amidst an increasingly difficult political and economic environment. This is indeed a formidable challenge but one BRI has successfully met since Indonesia declared independence in 1945. However, the second challenge facing BRI is even more daunting. While continuing to navigate the treacherous waters of well-intentioned but counterproductive national policies that threaten to undermine past accomplishments in financial inclusion, BRI must also manage a transition back to sustainable, market-based microbanking.
Feature
This past semester, the Rajawali Foundation Institute for Asia engaged in conversations and research on topics ranging from Indonesia’s election to US-Taiwan relations with the goal of continuing to develop policy solutions to the region’s most pressing concerns.
Feature
Democracy and development were on the ballot during Indonesia’s national elections earlier this month according to experts at a Rajawali Foundation Institute for Asia event on what Prabowo Subianto’s victory now portends for the future of the country.
Video
On February 23, the Rajawali Foundation Institute for Asia hosted a Global Elections Webinar Series event to reflect on the implications of Prabowo’s landslide victory for the state of democracy and prospects for national development in Indonesia.
Feature
This past semester, the Rajawali Foundation Institute for Asia engaged in conversations and research on topics ranging from Indonesia’s election to US-Taiwan relations with the goal of continuing to develop policy solutions to the region’s most pressing concerns.
Feature
Democracy and development were on the ballot during Indonesia’s national elections earlier this month according to experts at a Rajawali Foundation Institute for Asia event on what Prabowo Subianto’s victory now portends for the future of the country.
Video
On February 23, the Rajawali Foundation Institute for Asia hosted a Global Elections Webinar Series event to reflect on the implications of Prabowo’s landslide victory for the state of democracy and prospects for national development in Indonesia.
