The Indonesian fintech market offers great business opportunities: SFA
Jakarta (ANTARA) – The growth of the digital economy in Indonesia promises great investment opportunities not only for local but also foreign investors, a fintech association has said.
“Indonesia, just like Singapore, I believe is experiencing exponential growth as reflected by the speakers today. We see that there is a very strong collaboration opportunity between the fintech players in both countries,” said Singapore Fintech Association (SFA) Chief Operating Officer Reuben Lim in a press release received here on Monday.
The Singapore Fintech Association and Enterprise Singapore, together with Synthesis Communication Indonesia, organized a business seminar and networking event titled “Fintech: Fostering Cross Border Collaboration” on 24 August 2022 in Jakarta to further dissect investment opportunities in Indonesia’s digital economy.
The event was attended by 18 SFA members and several Indonesian companies from various sub-sectors of the digital economy as well as representatives of many fintech companies that are members of the Indonesia Fintech Association (AFTECH).
Meanwhile, Alwin Jabarti Kiemas, CEO of Indonesian digital signature and ID company TekenAja (VeriJelas) and the Deputy Secretary General of AFTECH observed that the country’s fintech sector has matured in recent years.
The Indonesian fintech landscape has been dominated by P2P (peer-to-peer) lending, with lending reaching Rp44.3 trillion (or around US$3 billion) as of June 2022 compared to Rp33.6 trillion in December 2021.
P2P lending firms have successfully tapped into the unserved market of traditional financial institutions, particularly in Java. Since P2P lending has primarily been focused on Java, there is great growth potential in the other islands.
“Prior to 2018, the landscape of Indonesia’s fintech sector was very simple with only two main digital lending activities, either through P2P lending or through payment systems. But after 2018, it expands from digital payment and digital lending to digital capital, insurance technology (insurance technology), wealth technology and market supply, Kiemas said.
The association also called for more initiatives to increase financial inclusion, including working with regional or provincial banks to disburse working capital loans. Currently, only around 7 percent of the total regional bank loans are paid out correctly.
That said, there is still about 92 percent idle cash in provincial banks that could be channeled into productive credit by partnering with crowdfunding fintech.
In addition, the government has recently continued to update regulations to encourage greater investment in the fintech space.
Bambang Suwarso of the Indonesian Chamber of Commerce and Industry, in his remarks, listed some dos and don’ts for foreign firms doing business in Indonesia.
“The relationships between employees are really important. We have to notice that sometimes when we don’t involve or have a good discussion with them, they can be hijacked by the competitor,” said Suwarso.
Communication and mutual understanding among investors is also important before carrying out transactions, said a partner for East Ventures, Melisa Irene.
She also highlighted that the B2B (business-to-business) market, in particular, offers great potential given Indonesia’s large small and medium-sized enterprise (SME) sector and greater availability of data.
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