It is bad news for the industry of China’s financial technology (fintech) which about 80 fintech companies based on peer to peer lending (P2P) schemes there got default payment during June 2018. And even worse news that it increased to 137 by mid of July 2018.
The fintech P2P lending industry in China has attracted around 50 million active customers and is able to distribute approximately US $ 192 billion or around Rp 2,745.6 trillion. Nevertheless, as a new financial service technology, fintech in China is still weak in regulatory oversight, so making it easy for ponzi and shadow banking practices.
Due to the risk of default payment that can not be anticipated by fintech companies and the regulator in China make the investors quickly withdrawing their money. “Investors lost the confidence in some fintech (companies) and do not know if the companies can survive,” said Macquarie Capital Analyst Dexter HSU that stated from Bloomberg, last weekend.
How does that affect to Indonesian company especially in fintech industry? The condition in here is the opposite, which the industry of fintech P2P lending in Indonesia actually increases rapidly. The almost bankrupt fintech companies in China make them interesing to our country’s condition which the industry is getting stronger and solid. According to data compiled by the Financial Services Authority (OJK), the fund that is distributed by Micro, Small and Medium Enterprises (MSMEs) reaches Rp 1,700 trillion in Indonesia. While that bank that already exist for a long time in this sector is only able to distribute the fund about Rp 700 trillion.
Now the chance of the funding gap of Rp 1,000 trillion is being targeted by many fintech companies. Director of Indonesia Fintech Association (Aftech) Ajisatria Suleiman stated that the possibility of Chinese investors to participate in the Indonesian market is very big. Ajisatria added that some regulations released by OJK as a financial services regulator in the country are already good enough. He took the example of OJK Regulation No. 77 of 2016 on information technology lending services and POJK No. 7 of 2013 on consumer protection in the financial services sector is good enough to set the fintech industry.
He also considered that the various regulations have the enough strength to prevent massive default payment as already happened in China. Nevertheless, Ajisatria also hopes that China’s fintech businessmen can meet the regulation in Indonesia if they really want to take the chance of the funding gap momentum.
Same idea as Ajisatria, CEO of Modalku Reynold Wijaya also does not seem worried if China’s fintech P2P lending companies that will do business here have a good performance. “What we do not want is that unknown platforms coming in, (because) the important role of regulators and platforms that are already credible to work together (and) creates a healthy industry,” he said.
Co-Founder & CEO Akseleran Ivan Nikolas Tambunan said some fintech P2P lending companies from China began to come to Indonesia. According to the information, , they are newly focused on the micro segment or loan for consumption as the beginning of doing business here. “The player is already crowded, and if there is a fintech P2P lending that coming in, it should be a big companies,” he said.
The perfomance of local fintech fairly solid
Another case in Indonesia where the trend of non-performing loan (NPL) or default payment in the fintech peer to peer lending industry significantly continues to decrease. OJK estimates the ratio of default payment to the end of the year below to 1%.
Director of Fintech Licensing and Oversight Management of OJK Hendrikus Passagi said that the NPL accumulation of the fintech industry until April 2018 has dropped to 0.53%. The ratio is more reduced compared to the end of January 2018, which the NPL reached 1.28%. This means that NPL fintech in our country continues to improve since the beginning of this year.
The improvement of fintech lending’s default payment can not be separated from the artificial intelligence technology that applied by fintech to approve low-risk loan applications. Except of that, the trend is also influenced by the improvement of the economic conditions. And no less important is the desire to gain access to financial services for most of the people who have not got the opportunity from the banking industry. “Until May 2018 we estimate nearly to 0.4% until the end of this year, it is predicted that the NPL rate is below 1%,” said Hendrikus.
Source: Antara, Bisnis, OJK
Disclaimer: This article is a summary of news articles obtained from a number of mass media. We are not responsible for the accuracy of data or sources of information presented by the media that became the reference.
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