OJK Reveals The Challenges Of Financing Company Business Development

Chairman of the Board of Commissioners of the Financial Services Authority (OJK) Mahendra Siregar (left two). Photo: (Aris Nurjani/VOI)

JAKARTA - OJK Chief Executive of Financing Institutions, Ventural Capital Companies, Micro Financial Institutions and Other Financial Services Institutions (PVML) Agusman revealed, one of the challenges of developing finance company business is funding sources that still depend on bank loans.

This is reflected in the portion of bank loans taking a portion of 91.19 percent of total funding as of December 2023.

"The financing company industry also has the challenge of maximizing the use of its assets in the distribution of financing which can be seen from the Financing to Asset Ratio (FAR) indicator," he explained, Tuesday, March 5, 2024.

Agusman menyampaikan FAR industri perusahaan pembiayaan sepanjang periode 2017-2023 tetap terjaga di atas 80 persen. Namun, persebaran tingkat FAR di industri perusahaan pembiayaan belum merata di mana sebesar 50 persen persen perusahaan pembiayaan masih memiliki FAR di bawah 80 persen.

In addition, related to efforts to encourage FAR, there are still various business opportunities for other financing companies that can be optimized, such as sustainable finance and financing with sharia principles.

Agusman said that along with the domestic economy that continues to grow and be resilient in the midst of a global economic slowdown situation, the financing company industry shows good growth performance.

The outstanding financing distributed by the industry in December 2023 grew by 13.23 percent (yoy), with a nominal financing of IDR 470.86 trillion.

This growth was also followed by quality financing risks maintained with an NPF of 2.44 percent.

In addition, Agusman said, if you look at the financing disbursed by the financing company industry, most of the financing company's business activities are multipurpose financing or financing for consumptive activities, which is around 52 percent as of December 2023.

"In line with this description, the portion of financing distributed to MSMEs in the same period was only 35.26 percent," he said.

Agusman added, Indonesia has finished carrying out a democratic party in 2024 which will run smoothly. This will certainly affect the confidence of business actors, especially the financing company industry, to be more optimistic about the national economy.

Therefore, OJK launched the Roadmap for the Development and Strengthening of Financing Companies 2024-2028. This step is in line with the mandate of Law Number 4 of 2023 concerning Strengthening and Development of the Financial Sector (P2SK).

Furthermore, Chairman of the Board of Commissioners of the Financial Services Authority (OJK) Mahendra Siregar said this roadmap was the 7th launched by the OJK since carrying out its mandate in July 2022.

"OJK is obliged to develop and strengthen the entire financial services industry mentioned in the P2SK Law," he said.

Mahendra added that this roadmap was launched not only to increase the cost of the OJK treasury, but to follow up on the P2SK Law.

Therefore, Mahendra conveyed whatever consequences are needed to implement the roadmap into the obligation of all parties.

"In the future, it is how the steps are carried out effectively and if there are obstacles, what are the problems and who can provide support to overcome them, how quickly can we achieve this commitment. Of course 2028 is the deadline, it doesn't mean that we have to wait for 2028 and then everything will be finished," he said.