Govt should allow full foreign ownership: APPI<\/p>\n
The Jakarta Post, Jakarta<\/p>\n
The pace of growth in the country's finance industry could
\nfurther be accelerated if the government allowed full ownership
\nin local financing firms, the industry's association says.<\/p>\n
Chairman of the Indonesian Financing Firms Association (APPI)
\nSusilo Sudjono said on Monday there was actually high interest
\nfrom foreign investors to get into the country's financing
\nbusiness.<\/p>\n
However, it has been hampered by the fact that the government
\nhad since 2002 prohibited full foreign ownership.<\/p>\n
"It is ironic. While many foreign investors wanting to expand
\nthe industry cannot get the needed business permits, on the other
\nhand, there are many licensed financing firms who are actually
\nnot doing any business at all," Susilo said.<\/p>\n
There are currently 230 financing firms licensed at the
\nfinance ministry and members of APPI, but only 126 are active.<\/p>\n
Susilo explained that for the time being, interested foreign
\ninvestors could only enter the industry through joint venture
\nschemes, by buying up to 85 percent of the shares of local
\nfinancing firms.<\/p>\n
Of the 230 APPI members, there are a total of 35 joint venture
\nfinancing firms.<\/p>\n
"Foreign investors can actually strike up a joint venture with
\ndormant financing firms, but it would be too risky, as such firms
\nare usually in an unhealthy financial condition," he said.<\/p>\n
Concerning the prospects for financing firms in the country,
\nSusilo cited data from APPI that shows the total assets of
\nfinancing firms in the country rose to Rp 74.9 trillion (some
\nUS$7.8 billion) last year, up from Rp 47.2 trillion in 2003, or
\nalmost double 2002's Rp 39.9 trillion in assets.<\/p>\n
The largest contributor to the financing firms' assets is
\nfunds channeled to consumer financing activities -- particularly
\nfor car loans -- reaching 90 percent or Rp 34.4 trillion of the
\nassets.<\/p>\n
Financing firms are also becoming the public's main
\nfinanciers, as 90 percent of motorcycle loans and 70 percent of
\ncar loans are done through the firms, as compared to 10 percent
\nand 30 percent, respectively, through banks, Susilo claimed.<\/p>\n
Susilo however denied that financing firms promote consumptive
\nbehavior, as many of the car and motorcycle loans are used for
\nproductive purposes such as going to work or being rented for
\nbusinesses.<\/p>\n
APPI expects the figures to grow by another 10 to 20 percent
\nthis year, with more financing firms resorting to bond issuances
\nas a source of their funds.<\/p>\n
At least four financing firms have issued bonds worth Rp 3.1
\ntrillion as of April, in addition to nine firms issuing Rp 5.2
\ntrillion in bonds last year.<\/p>",
"url": "https:\/\/jawawa.id\/newsitem\/govt-should-allow-full-foreign-ownership-appi-1447893297",
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"sponsor": "Okusi Associates",
"sponsor_url": "https:\/\/okusiassociates.com"
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