AFPI Reports IDR 1,650 Trillion Credit Gap in Indonesia

The Indonesian Joint Funding Fintech Association (AFPI) has reported that a financing gap of approximately Rp1,650 trillion remains in Indonesia’s financial sector.

AFPI Chairman Entjik S. Djafar said the country’s total financing needs actually reach around Rp3,600 trillion. Of that amount, the banking industry and conventional financial institutions have only been able to disburse around Rp1,950 trillion in financing, while the online lending industry contributes around Rp105 trillion to Rp110 trillion.

“To this day, there remains a financing gap in our country of around Rp1,650 trillion,” Entjik said at a Journalism Workshop in Jakarta on Thursday.

According to Entjik, the size of the gap shows that many of the public’s financing needs still cannot be met by banks or the conventional financial industry.

He assessed that one factor hampering the growth of the online lending industry is the proliferation of illegal online loans. Many people still equate licensed online lending services with illegal loans, resulting in low trust in the industry.

“Online lending is a service that is licensed and supervised by the OJK, subject to various regulations, from POJK to consumer protection provisions and industry conduct guidelines developed by AFPI. Meanwhile, illegal loans have no licence, are not under regulatory supervision and are growing rapidly. Why? Because they are very aggressive and have no rules,” Entjik said.

For this reason, Entjik believes the role of the media and journalists is crucial to improving public understanding of the difference between licensed online lending and illegal loans, while also providing public education on the risks of using illegal services.

In an effort to strengthen this literacy, AFPI is collaborating with the Indonesian Journalists Association (PWI) through a Journalism Workshop themed “Online Lending for Financial Inclusion, Journalism for Public Protection.”

PWI Central Chairman Akhmad Munir appreciated the collaboration established by AFPI to improve public literacy regarding the online lending industry.

“This workshop is important because rapid technological advances have changed various aspects of people’s lives, including digital funding or online lending,” Munir said.