OJK gives OK to finance providers’ expansion
(7 December 2015 – Indonesia) Indonesia’s central bank has given its permission for domestic multi-finance companies to open lending to new sectors, to help kick-start the country’s flagging economy.
Financial Services Authority (OJK) chairman Muliaman D. Hadad said the financial regulator was fully behind non-bank finance companies moving beyond their existing financing portfolios, which predominantly consist of automotive and heavy equipment businesses.
Muliaman said: “There will be a consortium of multi-finance companies and an establishment of several working groups comprising the firms as well as guarantors and related ministries to study the potential of financing in those sectors.”
Several ministries, including the OJK and the Agriculture Ministry, in addition to multi-finance companies and guarantors are scheduled to sign a memorandum of understanding on the task force soon.
“We have been supporting the maritime sector lately and will continue to push others as we have also issued guidance on venture capital and creative industry recently,” he added.
Following OJK’s statement, the Indonesian Financing Firms Association (APPI), secretary-general Efrinal Sinaga said the endorsement for multi-finance companies to enter new sectors would assist financial providers to diversify their business.
“Out of Rp 462 trillion (A$46.5 billion) in our total assets as of now, about 67 percent and 31 percent are contributed by the financing of vehicles and heavy equipment, while the rest comes from electronics and others. We cannot grow well if we limit our financing to certain sectors,” Efrinal said.
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