JAKARTA – A healthy economic system of a country regulates the mechanism and coordinates financial institutions. Financial institutions are divided into two, namely Bank Financial Institutions (LKB) and Non-Bank Financial Institutions (LKBB). Both of them function as public financial intermediaries. Meanwhile, financial companies in Indonesia are included as pillars of the economy, including non-bank financial institutions.
Like a company, a financial company is organized with the aim of producing something, processing, producing goods, trading, providing services, and other activities that are not allowed to collect funds directly from the public in the form of savings.
Citing excerpts from Anita Christiani's explanation in Eka Rizky Permana's paper entitled Legal Protection of Baitul Mal Wa Tamwil (BMT) Customers in Indonesia, written in 2016, the following are non-bank financial companies that have become pillars of the Indonesian economy:
A financing institution is a business entity that carries out financing activities in the form of providers of funds or capital goods. Financial institutions, according to Article 1 and Article 2 of Presidential Regulation of the Republic of Indonesia Number 9 of 2009, include Financing Companies, Venture Capital Companies, and Infrastructure Financing Companies.
Financing Company, performs financing on leasing, factoring (factoring), credit cards (credit cards), and consumer finance (consumer finance). Venture Capital Company, is a business entity that conducts business of financing/capital participation to a company within a certain time in the form of equity participation, participation through convertible bonds, and/or financing based on profit sharing. Infrastructure Financing Company, which includes providing direct loans for infrastructure financing, refinancing, and providing subordinated loans related to infrastructure financing. Insurance agencyInsurance, also known as coverage, is an agreement between the insurer who binds himself to the insured, by asking for a premium which in the future provides compensation to the insured due to loss, damage, or loss of profit that may be experienced due to an unspecified event.
Capital marketThe capital market in Indonesia, according to Law No. 8/1995, is an activity related to the public offering and trading of securities, public companies related to the securities they issue, as well as institutions and professions related to securities.
Securities in capital market activities are securities in the form of debt acknowledgments, commercial securities, shares, bonds, proof of debt, participation units in collective investment contracts, futures contracts for securities, and any derivatives of securities.
That is an explanation of financial companies in Indonesia that are included as pillars of the financial sector.
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