Indonesia’s Fintech Lenders Association Offers to Assist with Disbursing Funds Allocated to COVID-19 related National Economic Recovery Program

Indonesia’s Fintech Lenders Association (AFPI) has reportedly offered to help with disbursing funds that have been allocated to the country’s national economic recovery program (PEN).

As first reported by the Jakarta Post, the Indonesian government has been struggling to obtain the data required to provide the funding to the appropriate places. Adrian Gunadi, Chairman at the AFPI, stated on September 3, 2020, that the nation’s Fintech lending sector aims to serve the unbanked or financially underserved.

He added that these lenders could assist the government with better serving the needs of micro, small and medium enterprises (MSMEs). He also mentioned that the lending sector already has a central data center and analytics capabilities that may help with addressing any issues related to loan disbursements. The data center reportedly holds important information on over 25 million Indonesian enterprises, which Fintech service providers have been using to build credit profiles.

Gunadi, who’s the chief executive of Investree, a P2P lending platform, stated:

“The presence of Fintech lending platforms – either in the consumptive or productive sector and especially for SMEs – [may serve] a big role in supporting the national economic recovery effort. Data has been one of the focal points of the P2P lending industry.” 

AFPI members had helped with issuing Rp 113.46 trillion (appr. $7.7 billion) in loans during this year (as of June 2020). This represents a significant 153% increase year-over-year. These disbursements were  supported by the efforts of various other stakeholders in the nation’s Fintech lending ecosystem, which includes digital commerce platforms.

According to Gunadi, Indonesia needs more regulatory support from the government, as this can potentially help with improving access to reliable financing options.

The Indonesian government has set aside Rp 123 trillion (appr. $8.3 billion) out of its Rp 695.2 trillion (appr. $47.1 billion) COVID-19 focused budget to assist local SMEs, which like other countries, are part of the foundation or backbone of the nation’s trillion dollar economy. Many Fintechs and other service providers in the country have taken a major hit due to the pandemic and resulting socioeconomic challenges.

But the government has reportedly only spent around 25% of its Coronavirus budget, which has led to concerns regarding if and when the Indonesian economy will make a recovery.

Rosan Roeslani, chairperson of the country’s Chamber of Commerce and Industry (Kadin), has claimed that local Fintech lenders have assisted many SMEs with becoming a part of the digital economy. But he points out that only around 14% of the nation’s 60 million SMEs have actually moved over to an-digital ecosystem (meaning handling most of their operations online).

There are at least 158 Fintech platforms that have officially registered with the Financial Services Authority (OJK), as of August 5, 2020. As confirmed by the Jakarta Post, only 33 of these service providers have been awarded a license to operate in the country.

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