The 2020 Economic evaluation of West Papua Province and the outline of 2021 economic prospects provide helpful guidelines to prepare future economic development strategies. The effort calls for a synergy of all stakeholders, the local government, financial agencies, and banking activities to face any challenges, especially amid a pandemic situation.
#1 – The Role of Bank Indonesia in West Papua
In West Papua, Bank Indonesia (BI) serves as a strategic partner in monitoring and maintaining inflation and price stability. BI promotes local economic growth by ensuring that the cash and cashless payment systems are safe, efficient, and trustworthy. More details of BI activities in the land of Papua are:
- Encouraging the progress or the well-running coordination between regional monetary, fiscal, and real sector functions
- Maintaining the stability of the regional financial system
- Controlling the payment system
- Strengthening the role of the Regional Inflation Control Team (TPID)
- Acting as advisory roles to the regional government through BI Regional Economic and Financial Reviews
- Developing regional MSMEs
#2 – The Synergy between the Financial Service Authorities (OJK) and the BPRs
The Financial Service Authority (OJK) keeps its synergy with the rural banks (BPRs – the People’s Credit Banks) in West Papua. The OJK performs a routine agenda of evaluation and appreciation of BPRs’ performance as well as the socialization of the latest provision regarding BPRs.
The routine agenda acts as a gathering medium of OJK and the BPR management to build communication with other BPRs in Papua and West Papua provinces. They will discuss trends in the latest business and banking activities, especially during the pandemic and aftermath.
Meanwhile, the criteria for the BPR appreciation are, among others, reporting accuracy, governance implementation, and business growth. The BPR that excels each year can give a contribution to its local people and region improvement.
#3 – Encouraging the Acceleration and Expansion of Digitalization
Bank Indonesia (BI) plays another essential role in the economic development in West Papua. BI encourages the local government in accelerating and expanding the regional digitalization efforts. BI has membership in Satgas P2DD (the Task Force for the Acceleration and Expansion of Regional Digitalization), following Presidential Decree No. 3 of 2021.
The P2DD Task Force has two main tasks, namely:
- Encouraging the ETPD implementation in the regional setting. EPTD is Electronification of Regional Government Transactions. The purposes are to improve the transparency of any financial transactions, support the local government, and make financial management systems integration. The final goal is to boost regional incomes.
- Promote the growth or expansion of digital payment transactions in public so that financial inclusion achieved. Another goal is to integrate finance and the national digital economy.
In June 2021, BI hold capacity building activities for the Team of Regional Digitalization Acceleration and Expansion (TP2DD) in Waisai, the capital of Raja Ampat Regency.
The establishment of TP2DD is at the levels of provincial, regency/district, and city. It is an attempt to reinforce the coordination between the central government and regional governments. The regional head is in charge as the chair of TP2dd.
There have been nine TP2DDs so far: West Papua Province, Raja Ampat Regency, Manokwari Regency, South Manokwari Regency, Sorong Regency, South Sorong Regency, Arfak Mountain Regency, Tambrauw Regency, and Bintuni Regency.
The next target is to see other local governments establish TP2DD soon to elevate the digital economy in West Papua. Of course, this effort requires effective and continuous synergy between the stakeholders. They include the regional body for planning and development (Bappeda), financial institutions, and banking activities.
#4 – Managing the West Papua Provincial Government’s Local Cash
West Papua government entrusts the regional cash management to Bank Papua. Some of the reasons are most likely that Bank Papua continues to exhibit an increasingly positive growth and a stable financial performance.
The financial management transfer is one of the embodiment efforts of ETPD implementation in regional financial management. Bank Papua will technically manage all regional financial management operations. These include, among others, the employee salary payment, regional incomes, Revenue Sharing Fund (DBH), and the Otsus fund.
According to the Regional Secretary of West Papua, approval for the management transfer from BNI to Bank Papua came from the Ministry of Finance and the West Papua Governor. The transfer is also a recommendation and follow-up instruction from the Corruption Eradication Commission (KPK) of the Republic of Indonesia after several visits to this region.
Also, the regional government expects that Bank Papua can provide further loans or credits to the small and medium-sized businesses owned by Indigenous Papuan People.
#5 – Increasing the Cash-less Payment System
Given the pandemic condition, transactions of cashless payment systems are increasingly growing. Most of them are in the form of transactions through ATM cards, debit and credit cards. It is in line with the rapid economic development, technology, and financial digitalization expansion. Not to mention the trend of online shopping that has accelerated more digital banking and digital payment activities.
In the third quarter of 2020, the banking activities performance in West Papua exhibited a pretty solid trend of growth. The main factors of banking performance are assets, Third-Party Funds (DPK) collection, and credit lending. The increasing bank performance represents the public’s strong confidence level in the banking system.
