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Indonesian Chamber of Commerce and Industry


Indonesian Chamber of Commerce and Industry

Kadin Indonesia Encourages Government, MSME, and Private Collaboration to Build Disaster Resilient Communities

The Indonesian Chamber of Commerce and Industry (Kadin) in collaboration with the United States Agency for International Development (USAID) through the Urban Communities for Resilient Action (KUAT) programme and supported by USAID's Bureau for Humanitarian Assistance (BHA), today organised a Focus Group Discussion (FGD) entitled "Microinsurance as Disaster Risk Management for Communities". Held at Wisma PMI Jakarta, the FGD aims to foster collaboration among various stakeholders to develop micro disaster insurance products in an effort to support the government's Disaster Risk Financing and Insurance Strategy (PARB) and realise disaster resilient communities.

Indonesia is the country with the third highest disaster risk in the world based on the World Risk Report 2022. Most of the population in Indonesia also live in areas that are classified as disaster-prone. Data from the National Disaster Management Agency (BNPB) 2023 recorded that around 150 million people live in earthquake-prone areas, 60 million in flood-prone areas, 40 million in landslide-prone areas, 4 million in tsunami-prone areas, and 1.1 million in volcanic eruption-prone areas.

Multi-stakeholder support is needed in post-disaster mitigation, response and recovery efforts. For this reason, the KUAT programme run by USAID in collaboration with Kadin Indonesia and supported by BHA USAID needs to be implemented. This programme was created to reduce disaster risk and increase community resilience, especially for vulnerable groups and micro, small and medium enterprises (MSMEs).

Yani Motik, Vice Chair for Social Affairs and Disaster Management of Kadin Indonesia, explained that one of the targets of the KUAT programme is the development of a disaster insurance scheme to protect households and help communities recover in the event of a disaster. "The concept of disaster insurance products should ideally be effective, efficient, economical, and easily accessible to people affected by disasters, especially for MSMEs as the backbone of the community's economy. We hope that the multi-stakeholder collaboration between the community, private sector and local government in this FGD can encourage the creation of an effective and efficient disaster insurance scheme," said Yani.

He added that this collaboration is also an effort by Kadin Indonesia, as a strategic partner of the government, to support the role of business institutions in following up Law No 24/2007 on Disaster Management.

Head of the Financial Sector Policy Centre (PKSK) of the Fiscal Policy Agency (BKF), Adi Budiarso, appreciated the contributions of Kadin Indonesia, BHA, and USAID in supporting the government's PARB Strategy Roadmap to realise a disaster-resilient nation and society. "The PARB Strategy is a combination of financial instruments to obtain an adequate, timely and targeted, effective, sustainable, and transparent disaster risk financing scheme, which is expected to have a significant impact on the overall disaster risk financing scheme," Adi explained.

The role of the central and local governments is important in providing funding for disaster risk. In this case, Kadin Indonesia is working with local government leaders to encourage a disaster risk funding system that makes it easier for the community and MSMEs to get it.

PJ Regent of Bekasi, Dani Ramdan, welcomed the KUAT programme that seeks to develop a financing concept for affected MSMEs. According to him, this can be useful to help the Bekasi community in dealing with the impact of disasters that are increasing in number.

"Bekasi, which has the potential to be prone to floods, tornadoes, and landslides during 2023, needs a programme like this so that the community and MSMEs can be helped if they are affected by disasters at any time," Dani explained.

Deni Friawan, a researcher at the Centre for Strategic and International Studies (CSIS) Economics Department, also appreciated Kadin Indonesia's move to collaborate with all stakeholders through the KUAT programme. "The central government, regional governments, and the private sector should jointly tackle the existence of financing for MSMEs whose areas are prone to potential disasters, because based on 2020-2022 data, MSMEs are a resilient sector in growing the regional economy by 14-15%," said Deni.

In today's FGD, there were also several respondents such as the Director of Preparedness of the National Disaster Management Agency (BNPB), Pangarso Suryotomo, and the Deputy Project Director of Private Sector Engagement Lead USAID KUAT Indonesia, Victor Rembeth. In the future, Kadin Indonesia and partners will hold similar FGDs in various regions in Indonesia that have disaster risks, including in Bogor and Tangerang Regencies.

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Indonesian Chamber of Commerce and Industry