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The House of Representatives Officially Aprroved the 7th AFAS Protocol Law, the Insurance Industry is Expected to Develop

Jakarta, 05/10/2020 MoF - The House of Representatives (DPR) officially ratified or approved the Draft Law (RUU) on Ratification of Protocols to Implement the 7th Commitment Package in the Financial Services Sector in the ASEAN Framework Agreement on Services or the ASEAN Framework Agreement on Services (AFAS) in the 7th Plenary Session of Session Period I of Session Year 2020 - 2021 on Monday (05/10). The Seventh Protocol for Financial Services AFAS is one of the steps taken to encourage industry growth and the competitiveness of financial services business actors, particularly conventional and sharia general insurance.

"Through the commitments conveyed in the 7th Protocol of Financial Services AFAS, Indonesia invites general sharia insurance players in ASEAN to form partnerships with domestic players. The presence of these insurance service providers is expected to increase the availability of capital, bring healthy competition, and encourage the availability of general sharia insurance products in the Indonesian market, which in turn will have a positive impact on improving the national economy," explained Minister of Finance Sri Mulyani Indrawati who was present. Government's Final Opinion.

It is hoped that the implementation of this AFAS commitment will also encourage the realization of the ASEAN Economic Community. In this regard, ASEAN member countries can mutually expand their access to financial services markets so as to create a smoother flow of financial services and investment in the ASEAN region. The ratification of the AFAS Seventh Commitment Package Protocol for Financial Services will certainly provide legal certainty for ASEAN member countries to implement commitments in economic and financial cooperation in the region.

"The ASEAN general sharia insurance service providers will increase the capital accumulation of the domestic insurance industry, bring new knowledge, and bring healthy competition that will encourage the creation of competitiveness of domestic players. This will also increase the availability and quality of sharia general insurance products, and lower contribution premiums, "said the Minister.

The implementation of the AFAS Financial Services 7th Protocol Commitment is also in accordance with the sharia insurance business unit spin-off program. With this spin-off, it is hoped that sharia-based companies can be more independent and operate more effectively.

“However, spin-offs require large capital, which is often one of the main obstacles for domestic companies. Thus, the presence of investors from ASEAN countries through the implementation of the 7th AFAS Protocol, can be a solution to provide additional sources of capital in order to support the implementation of the sharia business unit spin-off of general insurance companies in Indonesia," said the Minister.

In her presentation, the Minister of Finance said that this ratification is an important step for the Indonesian financial services sector. This is also an effort to build productive synergy in the ASEAN region when both of them are experiencing the Covid-19 pandemic. The government will always coordinate and communicate with the legislature and financial service industry players so that they can get optimal benefits from international cooperation in the financial services sector. On the other hand, the Government together with the Financial Services Authority will strive to maintain public trust in the insurance industry in Indonesia. (dep/hpy/nr)