OJK to revise regulation on financing firms

JAKARTA. The Financial Services Authority (OJK) is revising a regulation on financial firms to enable them to operate on a wider scope.

Dumoly Pardede, OJK deputy commissioner for the supervision of non-banking financial industries, said in Jakarta on Tuesday that the financial superbody expected to complete the initial revision draft and hand it over to the government in the first half of 2014.

According to Dumoly, the revised regulation will contain a wider scope of operational options, such as project financing for the firms. “By expanding the scope, we are trying to prevent financial companies from becoming stagnant due to the already crowded market,” he said.

At the moment, the firms are limited to financing four segments only, as regulated by a Finance Ministry Regulation, which was issued in 2006. The four segments cover leasing, factoring, consumer financing and credit cards.

Dumoly said that all of the segments were already packed, especially the consumer-financing segment, which consists of automotive, home appliances, electronics and homes.

“With the revision, companies will also have a chance to venture into other sub-segments in consumer financing. Some of them have expressed their interest in providing funding for gold purchase,” he added.

The OJK currently works together with the Australian Securities and Investments Commission in preparing the technical changes, according to Dumoly. It plans to seek input from other regional bodies as well as formulating the revision.

Meanwhile, data from the Indonesian Financing Firms Association (APPI) shows that there are 158 financing firms operating in Indonesia as of now. By August 2013, the total outstanding financing channeled by the companies reached Rp 331.26 trillion (US$29.21 billion), up 12.7 percent year-on-year.

Consumer finance made up for the majority of the financing with 64 percent, followed by leasing with 34.1 percent and factoring with 1.9 percent.

APPI chairman Suwandi Wiratno said that the association had welcomed OJK’s efforts to revise the regulation, adding that it would allow the firms to start financing small-scale infrastructure projects across the country.

“We aim to provide funds for the productive sector. We may even utilize syndicated financing as is commonly used in banking,” he said.

Similar to Suwandi, Herman Lesmana, marketing director of Buana Finance, said that the revision would allow the firm to penetrate new areas. At the moment, the publicly listed Buana Finance (BBLD) leases heavy equipment, automotive, commercial printing machine and sea transportation.

The company recently launched its home financing in September to grab a wider market. So far, it has disbursed less than Rp 10 trillion in new financing, with the financing cap set at Rp 250 million per customer.

Buana set its 2013 financing target at Rp 3 trillion, but would most likely miss the target due to the lingering slowdown in the commodity sector, Herman said.

Separately, BCA Finance president director Roni Haslim said that it would expand its business into automobile refinancing if the revised regulation allowed it to do so. (Tassia Sipahutar)