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JAKARTA: Assets of the multifinance industry as of June 2010 are estimated to surge 19.27% from those in the first semester of last year.
The increased assets will be oriented to bolster financing to productive sectors.
The Indonesian Multifinance Companies Association (APPI) even projects the asets of the multifinance industry will surpass IDR400 trillion in the next five years. The projection is based on optimism that the economy will increasingly recover.
Chairperson of the APPI Wiwie Kurnia revealed the automotive sector was still considered the main business line.
"As of the end of the year, the total assets of multifinance companies can reach more than IDR200 trillion and in the next five years can hit IDR400 trillion if growth is assumed at 20% every year," he informed yesterday.
Ahead, he continued, multifinance companies would bolster financing to productive sectors by increasing the number of business activity schemes, which would include financing to the small and medium enterprises sector (SMEs) based on the Multifinance Bill.
The credit card business, which had not been explored too much by multifinance companies, is suggested be excluded from permissible financing.
Based on Presidential Regulation 9/2009 on Multifinance Institution and Minister of Finance Regulation 84/2006 on Multifinance Companies, multifinance business activities are business use lease, factoring, credit card, and consumer financing.
Data by the central bank (BI) showed the multifinance industry's assets as of April reached IDR188.15 trillion, soaring 14.97% from IDR163.64 trillion as of April 2009. The total amount of financing as of April 2010 reached IDR152.23 trillion, rising 16.51% from IDR130.65 trillion as of April 2009.
Of the value, the auto sector financing represented 90% or around IDR137 trillion, while the rest 10% came from financing to the non-automotive sectors, such as electronic credit.
Secretary General of the APPI Dennis Firmansjah added a growth in the multifinance industry contributed by the auto sector should not only be seen from consumption point of view, but also from productivity point of view.
"Financing is not only for new sedan cars, but we also have business leasing, and commercial car loans in commodity-producing regions to bolster the productive sectors."
M. Ihsanuddin, Head of Multifinance Bureau and Guarantee at the Bapepam-LK disclosed multifinance companies had a potential to become a financial institution able to allocate micro-loans. However, multifinance companies judicially were not able to directly lend money to the people.
Last week, the Ministry of Finance established a joint review team of the Multifinance Bill to accommodate the interests of the multifinance industry to serve as a legal umbrella for the industry.
"We have started reviewing the Bill drafting. The team has been approved by the Head of the Bapepam-LK," he said.
He added the Bill had now entered the national legislation program.
A Global Research Economist at Standard Chartered Bank Eric Alexander Sugandi viewed efforts by non-bank financial institutions, especially multifinance, to bolster SMEs growth were a positive thing to lower micro-loans provided by banks.
"This is a good thing, although we have to limit it later to prevent it from being overlapping with banks. With non-bank financial institutions participating in facilitating SMEs financing, retail loan interest rate possibly can go down."
Eric added with ever growing assets, multifinance companies should be regulated by law-level regulations.
Synergy with banks
Wiwie continued the synergy between multifinance companies and banks ahead would be bolstered in terms of networks, infrastructures, and multifinance business type.
Factors supporting multifinance companies to enter SMEs are vast networks of more than 2,000 branches covering areas unable to be covered by banks; huge data base; special skill in retail financing; huge information system; good human resources and collection officers; and flexibility.
Moreover, multifinance companies also provide easier financing to business sectors that find it difficult to have access to banking loans.
In response to this, Chairperson of the Federation of Private Domestic Banks (Perbanas) Sigit Pramono viewed banks and multifinance companies could be complementary to each other.
"The multifinance industry has every opportunity to record significant growth. Banks should consider multifinance complementary," he argued. (Bisnis/mts/spr)
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