According to Bloomberg News, Indonesian President Joko Widodo ordered on October 15 to stop issuing licenses to fintech companies whose businesses involve providing digital loans to consumers and small companies. This move is because facts have proved that many illegal companies go online to lure personal lenders and small companies with high-interest loans. According to the report, the government will take firm action against such illegal online lending through police intervention. The problem that Indonesia must solve is that although the proportion of legal online lending businesses operating in the country is quite large, it is mainly in the crowd…
Indonesian President Joko Widodo ordered on October 15 to stop issuing licenses to fintech companies whose businesses need to provide digital loans to consumers and small companies. Bloomberg News Report.
This move is because facts have proved that many illegal companies go online to lure personal lenders and small companies with high-interest loans.
According to the report, the government will take firm action against such illegal online lending through police intervention.
The problem that Indonesia must solve is that although the share of legal online lending businesses operating in the country is quite large, mainly in the crowd and P2P lending sectors, more and more usury has been following suit, mainly to attract unbanked People get high-interest loans through the Internet.
More than 1,800 illegal lending portals
Currently, there are 107 financial technology loan companies registered with the Indonesian Financial Services Authority. So far this year, the authorities have shut down more than 1,800 unlicensed FinTech lenders for online and social media applications. The authorities stated that since 2018, the government has frozen a total of 4,875 illegal loan accounts.
Widodo requires regulators to improve the governance of the entire fintech loan business, which has so far issued approximately IDR 260 trillion (USD 18.5 billion) in loans to more than 68 million people. Tightening regulation is also crucial to limit the risks of fast-growing industries.
By 2025, the rapidly prospering industry is expected to reach nearly US$9 billion
Despite these problems, Indonesia’s fintech activities are generally accelerating. This trend is characterized by a large number of venture capital rounds, the accelerated growth of local fintech startups, and the increased participation of foreign companies in the domestic market.
As the most populous country and the largest economy in Southeast Asia, Indonesia’s booming e-commerce market is expected to exceed US$43 billion this year, and its digital financial services sector is expected to soar at an annual growth rate of 34%, reaching 86% by 2025. Billion dollars, according to E-Conomy SEA 2020 Reports from Google, Temasek and Bain & Company.
