Peer-to-peer lending startups Investree, Amartha, and KoinWorks are among eight Indonesian fintech startups that have been officially registered under the Financial Services Authority (OJK) in May 2017.
“Up until now there are about 14 other fintech companies which are in the process of registering, and three companies that have yet to notify us whether or not they intend to proceed (with the process),” Edy Setiadi, OJK deputy commissioner for non-banking supervision, told local media.
Successful registration of Indonesian fintech companies is important as it marks the government’s formal recognition of the sector.
Adrian Gunadi, Investree co-founder and CEO said, “In practice, P2P lending services provide access to financial intermediaries for various parties with no face-to-face contact, which raises doubts about using similar services. We hope that the enrollment of Investree in OJK will be able to cultivate the trust of all stakeholders, especially lenders and borrowers who join our platform and the community in general, so that everyone can grow,” he stated.
As of June 5, 2017, Investree claims to have successfully disbursed Rp 148 billion unfunded loan with 592 total loans, 17.5 per cent average rate of return, and zero default.
Another firm that has been successfully registered, Amartha, hopes to boost small and medium enterprises that are its customers. Amartha received a series A funding in March, in a round that was led by Mandiri Capital Indonesia – a venture capital arm of Bank Mandiri. Existing backers Beenext and Midplaza Holding also participated in the investment, along with other new investors including Lynx Asia Partners
Amartha started in 2010 as a micro-finance institution. Six years later, it changed into a P2P lending marketplace. Today, Amartha claims to have facilitated over $6 million in loans to over 30,000 women micro-entrepreneurs while maintaining a 7-year long 0% default rate.
Keeping up with fintech
Indonesia’s fintech sector is currently the second biggest in the region after Singapore. President Joko ‘Jokowi’ Widodo realizes that the sector can play a crucial role in jumpstarting the country’s digital economy growth.
Every P2P lending startup must register and obtain a business license from the authority before running its business. A company must have at least $74,239 in capital upon registering, and an additional $186,300 to apply for the operating license. In total, the company must have access to a minimum $260,000. The numbers are half the required capital initially pegged in the draft version of the regulation, which was roughly $500,000.
It also regulates foreign ownership, which is limited to 85 per cent, and the value of loans that can be transacted, which cannot surpass $150,000.