MONTHLY REPORT
March 2008
PT DATA CONSULT
BUSINESS SURVEYS AND REPORT
Maya Indah Building
Jl. Kramat Raya No. 5L, Jakarta Pusat
Phone: 3904711, 3901877; Fax.: 3901877
E-mail: datacon@idola.net.id
Website:http://www.datacon.co.id
List of Content
INDONESIAN COMMERCIAL NEWSLETTER
MARCH 2008
¾ FOCUS:
¾ INDUSTRY PROFILE:
¾ COMPANY PROFILE:
¾ AUTOMOTIVE FINANCE:
Backgrounds ................................................................................................................44
General description of motorcycle industry ..................................................................44
Production tends to increase........................................................................................44
Motorcycle sales...........................................................................................................45
The largest producers of motorcycles ..........................................................................46
Financing by multi-finance companies incresing..........................................................46
¾ CONSUMER FINANCE:
¾ LEASING:
¾ FACTORING:
¾ APPENDICES:
¾ ECONOMIC INDICATOR:
Economic Indicators..................................................................................................... 82
Export and import......................................................................................................... 83
Gross Domestic Product .............................................................................................. 84
Oil Price and Foreign Exchange .................................................................................. 85
The Indonesian Economic Trends ............................................................................... 86
* * *
CONFIDENCE IN INDONESIAN
FINANCIAL INDUSTRY GROWING
The U.S. sub-prime mortgage crisis has hit various financial agencies in the
world especially investment banking which suffered billions of U.S. dollars. The
financial agencies suffering under the crisis are not only ones having large non
performing credit in the housing sector but also in other financial sector not
directly involved. The impact of the crisis has been more devastating than
previously expected.
The fall of share prices with the weakening of dollar has prompted share and
money market investors to turn to commodity market with the surge in the prices
of several prime commodities like mine and plantation commodities.
The uncertainty in the financial sector and share markets in the world also has
its impact on business in Indonesia both in the real sector or service sector. The
increase in the prices of fuels and basic materials have served a big blow to the
country’s manufacturing sector.
The crisis has also discourage the business sector to raise fund from the stock
market. Many companies in Indonesia have postponed plans to launch initial
public offering (IPO) and issue bonds in 2008. They choose to wait until the
market condition has improved.
However, despite the big challenged faced by the country’s domestic economy ,
the country’s banking sector has remained optimistic that they will perform better
in 2008 than in 2007. They set a higher targets for his year. The optimism was
expressed by banks at a meeting between the central bank leaders and leaders
of 15 largest banks in the country known as Systemically Important Banks (SIBs),
on March 17 at Bank Indonesia.
Based on the Banking Business Plans (RBB) 2008 presented to Bank Indonesia,
the credit expansion target set by the banks for 2008 is Rp 246.2 trillion or an
increase of 24.6%. The target represents higher optimism as it is higher than the
growth target of 22% set earlier by the central bank.
Bankers said export opportunity is still high for certain commodities and they
predicted strong growth in several other sector notably in the small and medium
enterprises. They said banks want to take advantage of the healthy expansion of
the small and medium businesses.
Table - 1
Indonesian banking indicators
(Rp trillion)
No Items Dec Dec Dec Dec
2004 2005 2006 2007
By the end of March 2008, Malayan Banking Bhd, the largest bank in Malaysia
won a tender to sell 56% stake in PT Bank Internasional Indonesia Tbk defeating
other bidders including Hong Kong Shanghai Banking Corporation (HSBC),
China Construction Bank, and Bank of China.
Maybank will become the new owner of BII by paying US$ 1.5 billion to
Fullerton Financial Holdings a shareholder of Sorak Financial Holdings. The bank
will also provide US$ 1.2 billion for tender offer for the remaining 44% stake.
Maybank said acquisition of the stake will expand its operations in Indonesia
indicating greater confidence of foreign investors in the country’s banking
industry.
Before the acquisition, Sorak Financial Holding was 75% owned by Fullerton
Financial Holdings, a subsidiary of Temasek Group with Kook Min Bank from
South Korea holding the remaining 25%.
Temasek, which also controls Bank Danamon, the country’s fifth largest lender,
was forced to sell its assets in BII under the central bank’s single presence policy
(SPP) which bans investors to have controlling stake in more than one bank in
the country. Temasek, opted to maintain Bank Danamon and sell BII although to
could have chosen merger between the two banks.
The government set relatively cheap prices for banks its sold at the start of
the divestment process in 2000. BCA, which was sold earlier was priced only at
1.20 times its book value (Price to book value/PBV). Similarly it was the same in
the case of Bank Niaga, which was sold in 2002 with a PBV of 1.48. Bank
Danamon and BII were sold a year later.
Bank Lippo was sold in 2004 precisely at its book value although the country’s
econmy has improved that year. Swissasia, gained much from the resale of the
bank in 2005 to Santubong at a price of 2.5 times its book value.
The selling prices of private banks such as Bank NISP and Bank were relatively
higher. Buana, which was acquired by foreign investor was sold at a price 2.5
times higher than its book value although the sales involved only the minority
stake.
On March 22, 2004 an agreement was signed for the acquisition of 22.5% of
Bank NISP at a price of US$ 70.4 million or 2.5 times higher than its book value.
It was the same when UOB acquired 23% stake in Bank Buana at a price of
Sin$196 million or 2.5 times its book value.
Bank Permata was the most recent bank sold. The bank was sold by the
government in November, 2004 when the bank already regained health
condition. The PPA, which replaced BBPN, sold 51% stake in Bank Permata to
a consortium of Standard Charter Bank and Astra International at a relatively
high price of US$ 305 million or 2.72 times its book value.
On December 8, 2004, PPA again sold 20% more stake in Bank Permata at a
price of Rp 750 per shares or 2.91 times its book value. PPA earned Rp 1.16
trillion gross from the deal.
The PBV of Bank Permata was higher compared to those of other banks in Asia
The highest record earlier was recorded by a Hong Kong bank by a bank from
Singapore with a PBV of 2.7. Now BII achieved a new record with a PBV of 4.7.
Table – 2
Share prices of banks in divestment process
No. Number of Price Year
Bank Investors
shares (PBV)
1 Farallon 51% 2002
Bank Central Asia 1.20
Investment
2 Commerce 51% Nov.2002
Bank Niaga 1.48
Asset Berhad
3 Bank Niaga Publik 20% 1.58 Nov. 2002
4 Asia Financial 51% June 2003
Bank Danamon 1.27
Indonesia
5 Bank Danamon Publik 20% 1.40 July 2003
6 Sorak 51% Nov. 2003
BII Financial 1.32
Holding
7 BII Publik 20% 1.47 Nov 2003
8 Swissasia 52.05% Feb. 2004
Bank Lippo 1.00
Global
9 Bank Mandiri Publik 20% 1.04
10 Bank Rakyat Indonesia Publik 40.5% 1.40
11 Bank NISP OCB 22.5% 2.50 March 2004
12 Bank Buana UOB 23% 2.50 2004
13 Bank Buana UOB 30% 2.59 2005
14 SCB-Astra 51% Nov. 2004
Bank Permata 2.72
International
15 Bank Permata Public 20% 2.91 Nov. 2004
16 Bank BII Maybank 56% 4.7 March 2008
Note:*) PBV: price to book value (book value)
Source: Data Consult/ICN
Conclusion
The World Bank also has noted the global crisis has little effects on the country’s
banking industry. The bank revised down only slightly its prediction of the
country’s economy from 6.4% earlier to 6% for this year. Cut only slightly it is
relatively high compared to those of many other countries.
It is, however, necessary to remain careful as the financial storms have not
stopped inflicting more injuries to the economies of many countries.
* * *
Rectification
Current Issue
The past three years saw a significant growth of multi-finance industry. The
Association of Financing Companies (APPI) said the multi-finance industry has
expanded by 15% annually on the average. The expansion followed improved
condition of the country’s economy. The gradual cut in SBI (Bank Indonesia
promissory note) interest rate to 8% by the end of 2007 contributed to the growth
of the multi-finance industry. The industry is dominated by leasing and consumer
finance especially car and motorcycle purchase financing. The two financing
systems contribute 95% to the total value of financing business in the country.
Consumer finance and leasing still dominated the industry until 2007. Non
performing credits in the two types of financing business is still tolerable below
3% and the business players are more careful and selective in extending credits
to their clients. Factoring and credit card financing have not gained significant
market in the country. They are not yet sufficiently socialized. Few businesses
use the two types of financing services.
Based on data the Bank Indonesia (BI), financing services were valued at Rp
107.7 trillion in 2007 up 15.7% from Rp 93.1 trillion in the previous year.
Consumer finance with a value of Rp 67.6 trillion accounted for the largest
portion of 62.8%, followed with leasing accounting for 33.9% or Rp 36.5 trillion
of the total value. Development of multi-finance follows the fast growth of the
consumption sector of the country’s economy. The expansion of the multi-finance
industry is reflected by its assets. Total assets of multi-finance industry was
recorded at Rp 127.26 trillion by the end of 2007, up 17.5% from Rp 108.34
trillion in the previous year. The total asset value, however, still fell short of the
target of Rp 130 trillion set by APPI.
However, it is not all shining for multi-finance industry. In 2007, the government
suspended the operation of a number of multi-finance companies for a number of
reasons - poor performance and violation of regulations. Among the companies
were PT Artamas Multi Finance, PT Air Multi Finance Corporation, PT Infiniti
Leasing
Leasing is financing system by companies for lessees for certain period to be
repaid by installments. The lessees pay a specified rent on specified terms on a
certain period. After the period is over the lessee is allowed to buy the capital
goods or extend the leasing period.
Factoring
Factoring is a system transferring company’s short term claims resulting from a
trade transaction at home or abroad.
Credit card
Credit card is a card shown by card holder to buy goods or services on credit to
be repaid to the credit card issuer after a certain period.
Number of companies
In the period of 2003-2007, the number of multi-finance companies in Indonesia
declined by 3.4% annually. Based on official data of Bank Indonesia (BI), there
were 239 companies in 2004, but the number declined to 2005 in 2007. In 2007
there were a number of companies securing the license including PT Al-Ijarah
Indonesia Finance, PT Mega Central Finance, and PT Mega Auto Finance. In
2006, there were 24 multi-finance companies suspended by the finance ministry
for failure to submit audited financial report for 2004. The companies were
allowed to continue activity only to recover credits they already extended, but
they were not allowed to offer more financing service. They were give six months
to prepare and submit financial report otherwise their license would be revoked.
Some of them succeeded in meeting the deadline in 2007 and were allowed to
resume normal operation but six other had their licenses cancelled as they could
not meet the deadline. The six companies were PT Artamas Multi Finance, PT
Air Multi Finance Corporation, PT Infiniti Finance, PT JRD Finance Utama, PT
Primarindo Finance Corporation and PT Primadana Putra Finance. The decline
in number was also caused by other factors such as merger among some of the
companies, change in line of business or bankruptcy.
Table – 1
Number of multi-finance companies
Year Number of Growth
(companies) (%)
2003 239 ---
2004 237 - 0.8
2005 198 - 16.5
2006 195 - 1.5
2007 205 5.1
Average growth - 3.4
Source: Finance ministry
ATPMs seek to team up with financing firms to support their sales. Some of
ATPMs even have their own financing companies. The Astra Group, which is he
ATPM for Toyota, Daihatsu and Isuzu cars and Honda motorcycles, has Astra
Sedaya Finance, Toyota Astra Finance to operate in car financing and Federal
International Finance in motorcycle financing service. The Indomobil Group also
has its own financing firms -- Indomobil Finance Indonesia for car financing and
Suzuki Finance Indonesia for motorcycle financing service.
Table – 3
Ownership of multi-finance companies
Owners Number of Share
companies (%)
Banks 20 9.8
ATPMs 10 4.9
Foreign principals 45 21.9
Other 130 63.4
Total 205 100.0
Source: ICN
Banks have the largest number of multi-finance subsidiaries. Banks having the
largest number of multi-finance subsidiaries is Bank Panin, which has three --
Clipan Finance, DKB Panin Finance and Verena Oto Finance.
Table - 4
Multi-finance companies and groups of owners
Groups of owners Shareholders Name of multi-finance companies
Bank Bank Danomon Adira Finance
Bank BII WOM
Bank BNI - BNI Multi-finance
- Pembiayaan Arta Negara
BCA BCA Finance
Bank BNP Paribas BNP LIppo Utama Leasing
Bank Niaga - Saseka Gelora Finance
- Niaga International Factor
Bank UFJ Indonesia U Finance Indonesia
Bank Permata - Bali Tunasfinance
- KDLC Bancbali Finance
BRI UFJ BRI Finance
Bank Sumitomo Exim SB Leasing
Mitsubishi Indonesia
Bank Mandiri Koexim Mandiri Finance
ABN Amro Bank ABN Amro Finance Indonesia
Bank Panin - Clipan Finance,
- DKB Panin Finance
-Verena Oto Finance
- Dai-Ichi Kangyo Panin Leasing
Citibank Citigroup Finance Indonesia
Table – 4 cont’d
Groups of owners Shareholders Name of multi-finance
companies
Group of ATPMs Astra - Astra Sedaya
- Astra Auto Finance
- Astra Multi Finance
- Stacomitra
- Toyota Astra Finance
- Federal International Finance
Indomobil - Indomobil Finance
- Suzuki Finance
Mitsubishi -Tiga Berlian Auto Finance
- Dipo Finance
Foreign principals GE Capital GE Finance
Sumitomo Corp - Summit Oto
- Oto Multiartha
Mitsui Corp Mitsui Leasing Capital
Fuji Ltd Jaya Fuji Leasing Pratama
Etc.
Source: Finance ministry/ICN
Main players
Astra Sedaya Finance (ASF), which was established in 1982 with the name of
PT. Rahardja Sedaya. After being taken over by Astra International, its name
was changed in 1992 with Astra Sedaya Finance. ASF became the holding
company for a number of subsidiaries including Astra Auto Finance, Estetika
Sedaya Finance, Stacomitra Sedaya Finance and Swadharma Bhakti Sedaya
Finance. The combination of the companies is known as Astra Credit Company
(ACC) offering financing service for the purchases of car products of the Astra
Group including Toyota, Daihatsu, Isuzu, BMW, Peugeot and Nissal Diesel
trucks.
Bussan Auto Finance (BAF), which started operation in 1997. It was originally
named Danamon Mitsui Otomotif Finance, with shareholders including PT.
Danamon Sanggrahan and Mitsui Co Ltd from Japan. In 1998, Danamon quit
and the name of the company was changed with Bussan Auto Finance. BAF
offer financing service for specially the purchases of Yamaha motorcycles. Oto
Multiartha, which was established in 1994 with the name of Manunggal Multi
Finance. In 1995, its name was changed with Oto Multiartha. In 1996 Sumitomo
Corp from japan took over the majority shares of the company. Oto offer
financing service for the purchases of cars. Its sister company Summit Oto
Finance offer financing service for the purchases of motorcycles.
Wahana Otomitra Multiartha (WOM), which was established 1982 with the name
of PT. Jakarta Tokyo Leasing by PT. Fuji Semeru Leasing. In 1997 the company
was 50.03% acquired by Bank International Indonesia (BII) and its name was
changed with Wahana Otomitra Multiartha. WOM offers financing service for the
purchases of Japanese motorcycles including Honda, Yamaha and Suzuki,
which dominate the domestic market. Leasing companies generally offer
financing service for heavy equipment such as tractors, loaders. excavators,
and other capital goods. Leasing business grew fast lately with the brisker
business in the mining and plantation sectors as well in construction sector.
Jati B, which was valued at US$ 1.65 billion after being long delayed. The 2x660
megawatt PLTU is located in Jepara, Central Java. Agreement between CJP
and PLN in the form of leasing was on build, lease and transfer (BLT) scheme.
In 2006, CJP as a lessor handed over the maintenance, production and sales of
power to PLN as a lessee. The leasing is for 20 years.
Chandra Sakti Utama Leasing (CSUL), which was established in the 1990s.
CSUL is a subsidiary of the Trakindo Group with PT. Trakindo Utama a a holding
company. CSUL offer leasing service for the purchases of Caterpillar heavy
equipment from the United States with Trakindo as the agent. CSUL has
branches in Medan and Surabaya.
Orix Indonesia Finance (ORIF), which was established in 1975 with the name of
PT.Orient Bina Usaha Leasing (OBUL). The company is a joint venture between
ORIX Corporation (85%) and Yayasan Kesejahteraan Karyawan (workers’
welfare foundation) of Bank Indonesia (15%). ORIF offers financing services for
the purchases of heavy equipment, ships, office equipment, industrial machines,
as well as cars.
Credit card financing companies offer service for the purchases of goods and
service using credit cards. Based on data at Bank Indonesia (BI), the principals
of credit card in Indonesia at present are Visa International, Mastercard
International, Diners and Amex. There are 22 issuers of credit cards in the
country including 20 banks and two multi-finance companies.
Diner Jaya Indonesia International is the issuer of credit card under license of
the U.S. based Diners Club. Diners Club’s share of the market in Indonesia is
relatively small compared with those of Visa and Master Card.
The consumer finance sector is the largest contributor to increase in the assets
of multi-finance industry. In 2007, demand for car financing service grew from
2006. Leasing also contributes considerably lately especially with the growing
business in the plantation sector notably in Sumatra and Kalimantan.
Table - 6
Development of assets, 2003 - 2007
Year Total assets Growth
(Rp trillion) (%)
2003 50.1 ---
2004 78.9 57.5
2005 95.5 21.0
2006 108.9 14.0
2007 127.3 16.9
Average growth 27.4
Source: BI
Oto Multiartha is the third largest with assets valued at Rp 5.9 trillion. Oto is a
joint venture company between Sumitomo Corp from Japan (76.14%) and PT.
Sinarmas Multiartha (21.59%) of the Sinar Mas Group which is owned by the Eka
Tjipta Wijaya family. This company offer financing credit only for the purchases of
Japanese cars Suzuki, Mitsubishi, Toyota, and Daihatsu. The grouping does not
include PT. Central Java Power (CJP) as a special multi-finance company with
assets valued at Rp 16.4 trillion. CJP is different from other multi-finance
companies as it provides only financing service for PLTU Tanjung Jati power
plant.
Table – 7
20 largest multi-finance companies by assets, 2007
Multi-finance Assets Share
(Rp billion) (%)
Federal International Finance 9,059 7.1
Astra Sedaya Finance 7,449 5.9
Oto Multiartha 5,962 4.7
Wahana Ottomitra Multiartha 4,819 3.8
Summit Oto Finance 4,343 3.4
GE Finance Indonesia 4,074 3.2
Dipo Star Finance 3,669 2.9
Orix Indonesia Finance 3,614 2.8
Adira Dinamika Multi-finance 3,306 2.6
Bunas Finance Indonesia 2,538 1.9
Chandra Sakti Utama Leasing 2,378 1.9
Tunas Financindo Sarana 2,125 1.7
KDLC BancBali Finance 2,090 1.6
Indomobil Finance Indonesia 2,055 1.6
Suzuki Finance Indonesia 1,984 1.6
BNP Lippo Utama Leasing 1,820 1.4
Caterpillar Finance Indonesia 1,758 1.4
Clipan Finance Indonesia 1,677 1.3
Mandala Multi-finance 1,529 1.2
U Finance 1,547 1.2
Sub total 67,796 53.2
Other 59,465 46.8
Total 127,261 100.0
Source: Finance ministry
After the 1997/1998 crisis, multi-finance business in Indonesia grew rapidly led
by those operating in consumer finance. The value of financing service grew
36.8% annually in the 2003-2007 period. In 2004, the value of financing service
was recorded at Rp 44.66 trillion, up 40.6% from Rp 31.84 trillion in 2003. The
growth rate peaked at 63.3% in 2005 to Rp73 trillion. The value grew further to
Rp 93.1 trillion in 2006. In 2005, the SBI rate was 14% forcing multi-finance
companies to raise their annual interest rate to 40% for motorcycles and 24% for
cars. As a result the growth rate fell.
In 2007 the SBI rate was cut almost every month to as low as 8% by the end of
that year resulting in brisker business in financing service. The annual interest
rates set by multi-finance companies were also cut to 8% for cars and 17% for
motorcycles. The value of financing rose 15.7% to Rp 107.7 trillion. Competition
against banks, however, put a brake on the leapfrogging growth of multi-finance
industry. Banks are more aggressive lately to offer credits for the purchase of
cars. Among the banks include Bank Mandiri, Bank Niaga, BNI, etc.
Table - 8
Development of financing service value, 2003 - 2007
Year Value Growth
(Rp trillion) (%)
2003 31.8 ---
2004 44.7 40.6
2005 73.0 63.3
2006 93.1 27.5
2007 107.7 15.7
Average growth 36.8
Source: BI, ICN
Table – 9
Value of financing services by types, 2007
Types Financing Market share
service (%)
(Rp trillion)
Leasing 36.5 33.9
Factoring 2.2 2.0
Consumer finance 67.6 62.8
Credit card 1.4 1.3
Total 107.7 100.0
Source: BI, ICN
The largest income was recorded by Federal International Finance (FIF) with an
income of Rp 7.8 trillion. FIF succeeded in selling 2.1 million units of Honda
motorcycles in 2007.
The second largest was reported by Astra Sedaya Finance (ASF) with income
totaling Rp 6.8 trillion that year. ASF sold 223,000 units of car products of the
Astra Group or 51.5% of the total number of cars sold in the country in 2007.
Oto Multiartha recorded Rp 5.2 trillion in come from the financing services for the
purchases of Japanese cars. See the following table.
Table – 10
Multi-finance companeis with income exceeding
Rp 1 trillion, 2007
Multi-finance companies Income Share
(Rp trillion) (%)
Federal International Finance 7.8 7.2
Astra Sedaya Finance 6.8 6.3
Bussan Auto Finance 5.3 4.9
Oto Multiartha 5.2 4.8
Wahana otomitra Multiartha 4.3 3.9
Dipo Star Finance 3.5 3.2
Summit Oto Finance 3.5 3.2
GE Finance 3.5 3.2
Orix Indonesia Finance 2.7 2.5
Bunas Finance 2.2 2.0
Tunas Financindo Sarana 2.0 1.9
KDLC BancBali Finance 1.9 1.8
Adira Dinamika Multi-finance 1.9 1.8
Chandra Sakti Utama Leasing 1.8 1.7
Indomobil Finance 1.8 1.7
Suzuki Finance 1.7 1.6
Caterpillar Finance 1.7 1.6
Mandala Multi Finance 1.4 1.3
U Finance 1.4 1.3
BCA Finance 1.4 1.3
Clipan Finance 1.3 1.2
Buana Finance 1.3 1.2
Mitsui Leasing Capital Indonesia 1.3 1.2
Table – 10 cont’d
Multi-finance companies Income Share
(Rp trillion) (%)
ABN Amro Finance Indonesia 1.3 1.2
BNP Lippo Utama Leasing 1.3 1.2
Surya Artha Nusantara 1.2 1.1
Central Java Power 14.4 13.4
Subtotal 83.9 77.9
Other 23.8 22.1
Total income 107.7 100.0
Source: Bapepam LK/ICN
Table – 11
Leading multi-finance companies in profit, 2007
Multi-finance companies Profit
(Rp billion)
Central Java Power 892
Adira Dinamika Multi-finance 560
Federal International Finance 410
Astra Sedaya Finance 285
Dipo Star Finance 198
Bunas Finance 198
Bussan Auto Finance 194
Oto Multiartha 173
BCA Finance 150
Orix Indonesia Finance 122
Mandala Multi-finance 110
Mitsui Leasing Capital Indonesia 86
Tunas Financindo Sarana 86
Indomobil Finance 77
Buana Finance 77
Clipan Finance 71
Caterpillar Finance Indonesia 67
Summit Oto Finance 42
BNP Lippo Finance 41
Multindo Auto Finance 40
Source: Bapepam LK
The losses suffered by WOM was attributed to provision of Rp 712 billion for non
performing credits. The company, being 50.03% owned by Bank International
Indonesia (BII) was required to make the provision under a Bank Indonesia. A
new regulation of the central bank No. 8/6/PBI/2006, requires multi-finance
companies to provide NPL provision. Other multi-finance companies reporting
losses are listed in the following table.
Table – 12
Multi-finance companies reporting losses in 2007
Multi-finance companies Loss
(Rp billion)
Wahana Ottomitra Multiartha 241
Swadharma Indotama Finance 21
BNI Multi-finance 20
Primarindo Finance Corporation 8
GMAC Finance 8
Siantar Top Multi-finance 5
SMBC Indonesia Finance 4
Diner Jaya Indonesia Internatioanl 3
Dai Ichi Kangyo Panin Leasing 3
Garishindo Buana Finance Indonesia 2
Eastern Finance Corp 2
Indocitra Finance 1
Mirasurya Multi-finance 1
Rama Multi-finance 1
Batara Internasional Finansindo 1
Niaga International Factor 1
Source: Bapepam-LK
Interest rates
The interest rates put up by multi-finance companies have tended to decline to
follow the SBI interest rate cut now 8%. The interest rates on credit range from
6% to 7% for the purchases of cars 16%-17% on credits for motorcycles and
1.9%-2.75% for electronic goods.
The interest rate on credits with the use of credit card is 2.75%-3%.. Leasing
interest rate is around 19%-20% and factoring 11% for dollar transaction and
20%-21% for rupiah transactions.
Table – 13
Average interest rates on credits offered
by multi-finance companies
Types of service Interest rates
(%)
Consumer finance
- Car purchases 6.5 – 7.0
- Motorcycle purchases 16.0 – 17.0
- Electronic good purchases
Credit card 2.75 – 3.0
Leasing 19%-20%
Factoring 11.0-21.0
Source: ICN processed
Based on data from the Financing and Collateral Bureau of the Capital Market
and Financial Agency watchdog Bapepam in 2007, Jakarta accounted for 29.9%
or Rp 32.2 trillion of the total amount of financing credits disbursed in the country,
followed by Central Java accounting for Rp 21.7 trillion (20.1%) and Sumatra for
Rp 15.3 trillion (14.2%). Java still is heavily dominant accounting for the bulk or
68% of financing credits provided by financing agencies in 2007. Following is
Sumatra as shown in the following table.
Table – 14
Distribution of financing credits from
multi-finance industry, 2007
Provinces/regions Value of credits Share
(Rp trillion) (%)
Jakarta 32.2 29.9
Central Java 21.7 20.1
Sumatra 15.3 14.2
West Java 14.0 12.9
East Java 8.3 7.7
Kalimantan 7.4 6.8
Banten 3.8 3.5
Sulawesi 3.3 3.1
Others 1.7 1.8
Total 107.7 100.0
Source: BI
Marketing Strategy
- Widening of distribution
By opening branches in small cities to make it easier for clients as most of the
clients of financing companies are people of middle to low income brackets.
- Customer relationship
Financing companies need to maintain customer relationship. Old clients are
offered special prices.
- Progressive installment which offers clients lower early installment that normal
level of installment.
- Degressive installment which offers clients a cut in installment every six months
to prevent clients from facing risk of failure in payment toward the end of the
payment period.
- Balloon payment which offer lower early installment than normal level of
installment and the remaining debt to be paid in the last installment.
Sources of Funds
Table - 15
Funding support received and sources of fund, 2003 - 2007
(Rp billion)
Source 2003 2004 2005 2006 2007* Average
growth
(%)
1. Domestic loans :
a. Bank 14,667 20,798 22,902 29,433 35,472 25.2
b. Other 962 734 881 3,376 3,768 72.8
2. Foreign loans :
a. Bank 6,886 18,623 20,805 25,153 30,190 55.8
b. Other 4,802 4,346 5,253 6,810 6,827 10.3
Total loans 27,317 44,501 49,841 64,772 76,257 30.6
4. Sub-ordinate loans
a. Domestic 226 230 213 79 29 - 32.9
b. Foreign 1,707 1,928 2,061 152 458 28.7
1,933 2,158 2,274 231 487 9.45
Source of funds for financing companies include bank and non bank loans,
bonds, private placement and other loans.
Bank loans
Loans from local and foreign banks have increased from year to years – from Rp
21.5 trillion in 2003 to Rp 65.7 trillion in 2007. Banks loan account for the largest
portion or 73.2% of the total amount of financial support received by multi-finance
companies in 2007.
In 2007 loans from local banks totaled Rp 35.4 trillion or 46.5% of the total
loan support and loans from foreign bank made up 39.6% or Rp 30.2 trillion of
the total loans. The rest are loans from other financial agencies.
Joint venture companies are also the largest borrowers of domestic loans. In the
same year, joint venture companies used Rp 20.31 trillion in domestic loans as
against Rp 13.14 trillion used by non joint venture private companies.
Joint financing
Multi-finance companies have two types of financing -- joint financing scheme
and sole financing - in operating their business. Joint financing scheme is
generally made with banks. Multi-finance companies not involving partners in
running their business operations issue bonds or seek syndicated loans if they
need additional capital.
In the past several years banks are more aggressive in acquiring multi-finance
companies to provide outlets for their excess liquidity in consumer credits,
especially car and motorcycle credits. The cooperation scheme is known as joint
financing.
In joint financing, a bank generally takes the majority portion of up to 90% in the
financing leaving the multi finance partner a 10% share.
A number of major banks such as Bank Mandiri have funneled funds to multi-
finance companies in joint financings scheme.
The country’s largest lender provided Rp 1.5 trillion in joint financing scheme
with multi-finance companies in 2006. The amount rose to Rp 2.25 trillion in
2007. The state bank teamed up with 20 multi-finance companies such as WOM
Finance and BCA Finance in the joint financing scheme that year.
Bank Danamon funnels Rp 10 trillion every year to its subsidiary Adira Finance
for joint financing scheme. The country’s fifth largest lender provides 90% of fund
used by Adira.
The targets among the financing companies are those having assets valued
more than Rp 500 billion but less than Rp 1 trillion. Those having assets of more
than Rp 1 trillion generally would not need to involve new investors.
Banks consider it safer to provide credit for the consumer sector than for the
corporate sector. It is easier to deal with non performing credit in the
consumption sector than in corporate sector. Based on data at Bank Indonesia,
consumer credits in the first nine months of 2007 totaled Rp 275.24 trillion or the
second largest after working capital credit of Rp 499.95 trillion, and largest than
investment credits of Rp 178.06 trillion.
BCA Finance uses of funds from its parent company Bank Central Asia (BCA)
and Bank Mandiri for 70% of funds for joint financing scheme.
FIF uses joint financing scheme to finance 65% of its operation and bonds and
loans for the remaining 35%. FIF has established cooperation with 12 banks
including Bank Permata, Bank Mega, Bank Mandiri, Bank Niaga, and Bank
NISP. See the following table.
Table – 16
Bank funds for several multi-finance companies, 2004
Table – 16 cont’d
Creditor/Partner Type of Date Credit Status Finance Financing Interest
financing Amount period shares rate/year
(Rp billion) (month) (%)
2. PT. Tunas Financindo Sarana
Bank Mandiri Joint 2004 400 revolving 48 Bank 11-13
financing Mandiri -
90%
TFS -10%
3. PT. Astra Sedaya Finance
Bank Permata Joint 800 Bank
financing Oermata-
90%
ASF-10%
Source: ICN processed
Joint financing scheme has also been used among multi-finance companies
without involving banks. APPI, however, said so far few multi-finance companies
have used such cooperation involving only 10 multi-finance companies.
Bonds
Meanwhile funds sourced from bonds have continued to increased. In 2007,
bond funds reached Rp 12.9 trillion or an increase of 29% from Rp 10 trillion in
the previous year. The bond funds accounted for 14.4% of the total funds used
for financing service of Rp 89.6 trillion that year. Necessitated by growing
demand for financing services, a number of multi-finance companies have been
more aggressive in issuing bonds.
Table - 17
Bonds issued by multi-finance companies
(Rp. Million)
Maturity Date
- Ownership
• Ownership by foreign companies of a financing company is not more than 85%
of the paid up capital.
• Capital participation of shareholders in the form of company is not more than
50% of the equity capital.
• The amount of equity of shareholders in the form of a PT constitutes the total
amount of paid up capital, additional paid in capital, reserve and profit/loss
balance.
• The amount of equity of shareholders in the form of cooperative constitutes the
total amount of principal saving, obligatory saving, reserve fund and grants.
Under the new regulation paid in capital or principal saving and obligatory
savings for the establishment of a financing company are determined as follows:
• Indonesian private company or joint venture at least Rp 100 billion.
• Cooperatives at least Rp 50 billion.
Private placement in the form of promissory notes or medium term note (MTN)
could serve as an alternative source of fund for the real sector including housing
credit (KPR), which so far has been dependent on bank loan. Financing
companies could offer a cheaper price than demanded by banks.
Consumer finance service accounts for 56.6% of the total value of multi-finance
business. The value of financing in the past five years has grown by 36.8% per
year. In 2007, the value of financing business rose to Rp 107.7 trillion from Rp
93.1 trillion in the previous year. Consumer finance accounted for 62.8% or Rp
67.6 trillion of the total value, with leasing accounting for Rp 36.5 trillion (33.9%),
factoring for Rp 2.2 trillion (2%) and credit card for Rp 1.4 trillion (1.3%).
Financing service for the purchases of automotive products made up 80% of the
total amount of consumer finance service. The rest is for electronic products. The
total assets of financing industry rose from Rp 108.9 trillion in 2006 to Rp 127.3
trillion in 2007 or an increase of 16.9%. Bank loans accounted for the largest
part of Rp 65.7 trillion, followed by bonds for Rp12.9 trillion in 2007.
With the cut in the reference interest rate of BI to 8% at present allows financing
companies to offer lower interest rate on their credit . Averagely financing
companies could cut the interest rate by 1-2 percentage points on credits for cars
and motorcycles. Therefore, multi-finance companies are expected to chalk up
better performance in this year.
Sales of cars totaled 512,000 units and sales of motorcycles are expected to
reach 5.2 million units in 2008. The increase in the sales of cars and motorcycles
will provide larger market for financing firms.
Meanwhile, leasing business is also expected to expand with the fats growing
plantation and mining sectors that will need more units of heavy equipment such
as excavators, tractors, loaders, etc. Coal, nickel and iron ore mining and
plantation sectors are the main users of heavy equipment.
The market of heavy equipment, however, is still smaller than the market of
automotive products. The market of electronic finance is also growing as
indicated by the increase ein the value of financing the purchases of electronic
goods.
The soaring prices of crude oil however, remains a threat to business expansion.
It is predicted that the value of financing service by multi-finance industry will
reach Rp 140 trillion this year or an increase of 30% from last year.
Based on assumption that the amount will rise 20%-30% per year, the value of
financing services in the next five years will reach Rp 282 trillion in 2012 with
car and motorcycle financing the largest contributors.
Table – 18
Estimate of total value of
financing servcies, 2008 – 2012
Year Total financing
(Rp trillion)
2008 140
2009 168
2010 201
2011 245
2012 282
Sources: ICN
* * *
Backgrounds
The expansion of automotive industry in the country is partly thanks to the role of
multi-finance industry that provides motor vehicle credits (KKB) and car
ownership credits (KPM). Brand holding sole agents (ATPM) said 80%-90% of
the purchases of motor vehicles are financed with credits.
Strong demands for motor vehicles provide large market for credits by financing
companies.
Seeing the potential business in financing business in the motor vehicle sector,
have prompted ATPMs to established their financing subsidiaries to facilitate the
sales of their products.
Astra Group, which is the largest ATPM in the country has a financing division
called Astra Financial Service. Under the division, the Astra Group has
established banking business and non bank financing business. The group has
a number of subsidiaries operating in financing business offering credit for the
purchases of cars and motorcycles as well as heavy equipment. Operating in
the motorcycle sector is Federal International Finance (FIF) and in car sector is
ACC (Astra Credit Company). In 2006, the group in cooperation with Toyota
Financial Service Corporation from Japan established a joint ventire financing
company Toyota Astra Financial Service (TA Finance).
FIF operates in financing business offering credits for the purchases of Honda
motorcycles, which are produced by PT. Astra Honda Motor, also subsidiary of
the company group.
FIF offers a 1 to 4 year credit for individual clients with an annual interest rate of
15%-17%. The credit term is 5 years for corporate clients or collective buyers.
FIF also offers credit for the purchases of electronic products through FIF
Spektra and sharia financing through FIF Syariah. FIF receives financial support
from Bank Permata.
Table – 1
Financing credits for new clients, 2003 - 2007
Year Value of new Number of new
credits financing contracts
(Rp trillion) (000)
2003 4.7 516
2004 7.9 844
2005 14.0 1,403
2006 11.6 1,206
2007 10.2 1,026
Source: FIF
FIF has also provided quite large credits to finance the purchase of second hand
motorcycles. Sales of second hand motorcycles facilitated with credits by FIF
totaled 432,000 units in 2007.
FIF provided credits for the purchases of 285,000 units of electronic products
such as TV sets, washing machines, refrigerators and AC through FIF Spektra in
2007.
Table – 2
Financing credits provided by PT FIFI by types of products,
2003 - 2007
(000 units)
Year Cub Sports Used Electronic
motorcycles motorcycles motorcycles
2003 805 55 15 -
2004 1,153 71 94 -
Fund sources
In 2008, FIF plans to issue its 8th bonds valued at Rp 1 trillion in May. It will be
part of bonds with a total value of Rp 2 trillion it plans to issue this year. The fund
will be used to strengthen its financing capacity.
This year FIF hopes to provide new credits for the purchases of motorcycle
amounting to Rp 12.5 trillion up from Rp 10.8 trillion last year.
FIF’s sources of fund include bonds, off shore investment and equity accounting
for 40%. Joint financing with banks account for 60% such as with, Bank Permata,
Bank Mega, BNI, Bank Niaga, NISP, Bank Commonwealth, Citibank, GE
Finance, Bank Syariah Mandiri (BSM), Bank Syariah Mega Indonesia and Bank
Lippo.
Around Rp 10 trillion of the financing credits will be for the purchases of new
motorcycles and Rp 2.5 trillion to finance credits for second hand motorcycles
and electronic products. This year FIF target to provide financing credits for 1
million units of motorcycles.
The 8th bond valued at Rp 1 trillion to be issued In April 2008 will consists of 4
series – A series valued at Rp 300 billion maturing in 2009, B series Rp 150
billion maturing in 2010, and C series Rp 300 billion maturing in 2011 and D
series Rp 250 billion maturing in 2012. FIF has named PT Kresna Graha
Sekurindo, Mandiri Sekuritas, and Indo Premier Securities as the underwriters.
Financial performance
The assets of FIF were valued at Rp 9.1 trillion by the end of 2007, down from
Rp 10.5 trillion a year before because of a decline in outstanding credits. FIF was
more selective in offering credits.
A decline was also recorded in income from Rp 4.4 trillion to Rp 4.3 trillion
because of smaller new credits extended in 2007.
However, its net profit rose from Rp 340 billion to Rp 410 billion on a decline in
cost of fund.
Table - 3
Financial Highlights of PT. Federal International Finance
(in Rp million)
Description 2006 2007
(31st Dec) (31st Sep)
ASSETS
a. Current Assets 9,621,867 8,101,090
b. Non Current Assets 866,418 958,008
Total Assets 10,488,285 9,059,098
LIABILITIES
a. Current Liabilities 7,034,706 5,410,687
b. Non Current Liability 1,784,801 1,717,276
c. Minority interest -
d. Equity 1,668,778 1,931,135
Total Liabilities + Equity 10,488,285 9,059,098
REVENUES
a. Revenue 4,442,801 4,298,230
b. Net Profit 340,897 410,176
Source: FIF
Astra Sedaya Finance (ASF) was established in 1982 with the name of PT.
Rahardja Sedaya. After being taken over by Astra International, its name was
changed in 1992 to Astra Sedaya Finance. It is 44.28% owned by Astra, 47% by
PT General Electric Services and 8.72% by PT Sedaya Multi Investama. ASF
becomes a holding company for a number of subsidiaries -- Astra Auto Finance,
Estetika Sedaya Finance, Stacomitra Sedaya Finance and Swadharma Bhakti
Sedaya Finance.
Apart from cars, ACC offers credits to the purchases of Yamaha, Suzuki and
Kawasaki motorcycles. Credit facility for Astra motorcycle product of Honda is
provided by FIF, a subsidiary of the Astra Group.
ACC also issued ACC Guard Plus , which is insurance protection for vehicles.
With a premium of 0.75% of the amount of monthly claims clients will benefit
from personal protection and goods protection.
ACC Protection is a insurance protection. ACC will write off the remaining car
credits in the event that the clients die from accidents. The heirs will not be
required to pay the remaining credits. For this facility ACC cooperates with PT
Asuransi Cigna.
ACC has continued to expand market not yet tapped by other companies or
banks such as Customer to Customer Financing, which is a financing facility of
ACC to help in the purchase of second hand cars with credits by individuals.
ACC has simplified the process of credit approval cutting the time needed from 8
hours to four hours at present.
Until now ACC has built 36 branch offices in 26 cities and established
cooperation with 2,000 dealers all over Indonesia. ACC has succeeded in listing
more than 600,000 clients. It has 6,000 payment points to facilitate its clients.
ACC has established cooperation with a number of banks including BCA and
Bank Permata to facilitate payments of installments. Payments could be through
the ATM of BCA, Bank Permata, telephone banking, Flexi-Tel Bank Permata,
Klik BCA and internet.
Table - 4
Number of cars purchased with credits
from ACC and types, 2007
Year Brand new cars Used cars
January 2007 3,606 3,632
February 2007 3,357 3,241
March 2007 3,741 3,540
April 2007 3,738 3,372
Total Jan – Apr 2007 14,442 13,795
Source: Astra International Tbk
In 2007, ACC provided vehicle financing credits of Rp 9.8 trillion. In 2008 the
amount is projected at Rp 12.5 trillion. ACC President Benny Tjoeng said the
target could be exceeded given the high record of performance the first two
months of this year. In January and February, ACC already extended credits
amounting to Rp 2 trillion. During that period cars sales in the country reached
40,000 units per month.
ACC provides credits for vehicles including 65% in brand new vehicles and 35%
in second hand vehicles. The brand new vehicles include heavy equipment for
mining, agro, transport and logistics industries making up 15%. ACC plans to
increase the portion of services for second hand cars to 40%. Most of 85% of the
second hand cars are made up of Astra products -- Toyota, Daihatsu, and Isuzu
– and the rest non Astra products such as Mitsubishi, Honda, Suzuki, Nissan,
and Mercedes.
Source of funds
In 2007, received loans from a syndicate of BNP Paribas, Citibank, and
Sumitomo Mitsui Banking Corporation (SMBC) amounting to US$ 60 million.
ACC also has received loans from local banks making up 20% of its total loan
amount in January. It will issue bonds in six series totaling Rp 1 trillion carrying
an annual coupon rate of 9.075%-10.3%.
Financial performance
In 2007, the assets of ASF fell to Rp 7.4 trillion from Rp 8 trillion in 2006 on a
decline of claims in financing credits. The company is more selective in offering
credit service.
Its income also fell to Rp 1.3 trillion from Rp 1.9 trillion, but its net profit rose to
Rp 249 billion from Rp 210 billion in the same period. The increase in profit was
as a result of smaller non performing loans and a rise in market value.
Financial Highlights
Table - 5
PT. Astra Sedaya Finance
(in Rp million)
Description 2006 2007
(31st Dec) (31st Oct)
ASSETS
a. Current Assets 7,178,857 6,446,058
b. Non Current Assets 849,220 980,542
Total Assets 8,028,077 7,428,600
LIABILITIES
a. Current Liabilities 4,563,438 3,827,922
b. Non Current Liability 2,242,543 2,257,319
c. Minority interest
d. Equity 1,222,096 1,343,359
Total Liabilities + Equity 8,028,077 7,428,600
REVENUES
a. Revenue 1,968,388 1,365,399
b. Net Profit 210,705 249,681
Source: ASF
PT. Toyota Astra Financial Services (TA Finance) was established in 2005 as a
joint venture company between Astra International Tbk and Toyota Financial
Service Corporation (TFSC) with a share ratio of 50%:50%.
TFSC is a subsidiary of Toyota Motor Corp. TA Finance constitutes the 31st units
of TFSC in 13 countries in the world. TA Finance started operation in 2006
offering credits for the purchases of Toyota cars. Its offers services in the form of
consumer finance for the purchases of non commercial cars by individual clients,
consumer finance for the purchases of commercial cars by corporate clients, and
leasing credits for the purchases of vehicles in large number.
TA Finance utilizes the service of Auto 2000 (Toyota dealer), which has wide
networks to promote its sales. Until now TA Finance has 7 branches to serve its
5,927 clients. TA Finance will handle the credit financing of 50% of the purchases
of Toyota consisting of non commercial segment making up 80% and
commercial segment making up 20%. * * *
Car market was strong in entering the year 2008, but it was more interesting to
note that sales surged to 47,500 units in February 2008 exceeding previous
month’s sales of 41,377 units. Normally sales in February are the lowest in
number because of the shorter working days. Year-on-year the February’s sales
shot up more than 100% from 23,650 units.
The increase was beyond expectation giving greater optimism for car makers
that they would continue to have better performance this year.
The optimism, however, will likely be short lived with the prices of oil remain
high.
Higher prices of crude oil might force the government to raise the prices of oil
fuels leading to market slump the like of 2006 after the increase in fuel price late
2005. In addition the increase in the price of steel and other basic materials may
also force cars maker to raise the prices of their products resulting in people
restraining from buying new cars.
Some observes also said the surge in car sales in the first two months of this
year would not reflect the real market condition in the rest of the year. It was
more likely that consumers had rushed to buy new cars before the car prices
rose higher as many have forecast, they said. If that is the case sales might
drop sharply in the following months.
In general, car makers have enjoyed an increase in sales since the government
launched deregulation measure in 1999 cutting the import duties on completely
built-up (CBU) cars and allowing foreign investors to control car factories in
Indonesia.
Averagely, car production has also continued to scale up since 2003 despite a
decline in 2006 as a result of a sharp increase in fuel price late 2005.
Table – 1
Auto production, 2003 – 2007
The second largest is the Indomobil group through PT. Indomobil Suzuki
International, which has a production capacity of 120,000 units per year. Among
its brands is Suzuki.
PT Kramayudha Ratu Motor is the producer and agent of Mitsubishi cars with an
annual production capacity of 100,000 units.
Table - 3
Producers of cars and production capacity
Name of assembling Status Brand Prod. Cap.
companies (units/y)
Astra Daihatsu Motor, PT PMA Daihatsu 105,000
Astra Nissan Diesel PMA Nissan Diesel (Truck) 6,500
Indonesia,PT
Table – 3 cont’d
Name of assembling Status Brand Prod. Cap.
companies (units/y)
Daimler Chrysler Indonesia, PMA Mercedes Benz, 8,000
PT (Mercedes Benz Chrysler, Dodge, Jeep
Indonesia, PT)
Gaya Motor, PT PMDN BMW,Isuzu,Peugeot, 60,000
Daihatsu, Nissan Diesel
General Motor Indonesia, PMA Chevrolet 30,400
Indomobil Suzuki PMA Suzuki 120,000
International, PT
Hino Indonesia PMA Hino 10,000
Manufacturing, PT
Honda Prospect PMA Honda 42,000
Motor, PT
Nissan Motor Indonesia, PMA Audi, VW, Volvo, 12,000
PT Ssangyong, Nissan
Krama Yudha Ratu PMDN Mitsubishi Colt 100,000
Motors,PT T120SS, Colt L300, Colt
Diesl FE, Fuso
National Assemblers, PT PMDN Suzuki, Mazda, Kia 21,000
Trijaya Union, PT PMDN Mitsubishi Buses 1,440
Toyota Astra Motor, PT PMA Toyota 170,000
Pantja Motor, PT PMA Isuzu 51,000
Source: Gaikindo/Data Consult
Note: PMA = Foreign investment company
PMDN = Domestic investment company
Multifinance industry plays a greater role in boosting sales of cars. Around 80%
of car purchases/sales in the country are facilitated with financing agencies either
banks or multifinance companies.
Table – 4
Systems of buying motor vehicles, 2007
The second largest is Oto Multiartha with outstanding credit of Rp 5,231 billion
or 14.8%, followed by Tunas Financindo Sarana with outstanding credit of Rp
2,041 billion and Toyota Astra Finance Rp 1,940 billion.
Table – 6
Multifinance companies and market share in car sector, 2007
(Rp billion)
Outstanding Share
No. Companies Credit (%)
1 Astra Sedaya Finance 6,225 17.6%
2 Oto Multiartha 5,231 14.8%
3 Tunas Financindo Sarana 2,041 5.8%
KDLC BancBali Finance
4 (Toyota Astra Finance) 1,940 5.5%
Interest rates
Tunas Financindo Sarana is among multifinance companies offering the lowest
interest rates of 5.5% to 8% a year. Astra Sedaya Finance, which has the
largest market share is among the companies offering the highest annual
interest rates of 10% -12%.
Oto Multiartha offers an annual interest rate of 8.86% to 11.10% and BFI Finance
9.5%-10.25%.
Advance payment
Loan-to-value (LTV) ratio is the ratio of loan offered by multi-finance companies
to the purchase value. Currently multi-finance companies set almost the same
LTV ratio of 80%-90%. There are, however, players in the level of dealers/show
rooms set false figure for advance payment to attract buyers.
In fact many dealers/show rooms in cooperation with multi finance agents offer
zero advance payment, in what they call subsidy on advance payment.
Table - 7
Factors prompting buyers to select certain financing companies
Companies Interest rate Duration LTV ratio
Astra Sedaya Finance 10%-12% 1-4 years 80%-90%
Oto Multiartha 8.86%-11.10% 3 years 80%-90%
Tunas Financindo 5.5%-8% 3 years 80%-90%
Sarana
BFI Finance Indonesia 9.5%-10.25% 3 years 80%-90%
Toyota Astra Finance 8.5%-9.9% 3 years 80%-90%
Indomobil Finance 9.5%-10.25% 3 years 80%-90%
Indonesia
Source: Multifinance Companies, Data Consult
Costs
Generally the fees charged by multi-finance companies are almost the same
ranging from Rp 250,000 to Rp 500,000 epending on the duration of the loan.
The fees are generally Rp 250,000 for a loan of 1 year, Rp 300,000 for two years
loan and Rp 400,000 for three-years loan and Rp 500,000 for four-years loan.
Table – 8
Fees set by multi-finance companies
Agencies 1 year (Rp) 2 year (Rp) 3 year (Rp ) 4 year (Rp)
Multi-finance 250,000 300,000 400,000 500,000
Source: Data Consult processed
PT ASF is associated with other financing companies under the ASTRA Group.
PT ASF has a 25% share in each of PT Astra Auto Finance, PT Estika Sedaya
Finance, PT Stacomitra Sedaya Finance and PT Swadarma Bhakti Sedaya
Finance.
PT ASF has a license to operate in leasing, factoring, credit card issuing and
consumer finance. However, up to now the company only focuses on consumer
finance and leasing. The company finances both new and used cars. For
financing the new cars, PT ASF gives high priorities to cars produced by the
Astra group including Toyota, Daihatsu, and Isuzu, BMW, Peugeot and Nissan
Diesel trucks.
ASF, better known as Astra Credit Company (ACC), is Indonesia's leading car
financing company, serving over 500 thousand customers with 35 branch offices
in 26 cities and suported by 1600 car dealerships and show rooms.
ASF serves financing for new cars for all cars brand under ASTRA Group (BMW,
Peugeot, Toyota, Daihatsu and NISSAN DIESEL) and Non Astra (Audi,
Chevrolet, Daewoo, Ford, Honda, KIA, Land Rover, Mitsubithi, Mazda, Jaguar,
Renault, Opel, SAAB, Subaru, Sangyong, Suzuki, VW, Volvo). It also finances
the purchases of used cars of any brands.
ASF provides installment payment process for their customers using cheque,
cash, ATM BCA, Telephone banking, flexiTel Bank Permata and internet –Klik
BCA.
Oto Multiartha
Established in 1994, the company was formerly named PT Manunggal Multi
Finance. In 1995, the company's name was changed into PT Oto Multiartha
(OTMA). In 1996, Sumitomo Corporation took over the majority shares of the
company.
companies and more than 18 local and overseas banks. The company is able to
finance the purchases of cars of all brands, offer fixed interest rate with easier
term and faster processing, and have availability of multi-sources of funding.
As the result of its strategy implementation, PT Oto Multiartha has now listed a
large number of clients and succeeded in expanding its market share. Starting
from only 4.3% share in 1999, the Company now has a market share of more
than 13% in car purchase financing service. The total amount of new units
financed also grows from 33,869 units in 2003 to about 42 ,000 units in 2006. Its
net profit has grown from Rp 92 billion in 2003 to around Rp 130 billion in 2006.
The company is the largest independent automotive financing company and has
no affiliation with car makers. The company had more than 64,000 active
clientst and assets valued at f Rp. 5,962 billion in 2008.
BFI
PT BFI Finance Indonesia Tbk (BFI) was established in 1982 as a joint venture
company under the name of PT Manufacturers Hanover Leasing Indonesia.
Manufacturers The company was 70% owned by Hanover Leasing Corporation
(MHLC) of the United States and 30% by 2 other Indonesian shareholders. In
1986 MHLC divested all its stake and sold it to the Ongko Group.
In March 1990, BFI was granted a "Multi Finance" license, which widens its
scope of activities to leasing, factoring, consumer finance and credit card issuing.
With the new status, the company's name was changed with PT BFI Finance
Indonesia. On May 16, 1990 BFl's shares was listed on the Jakarta Stock
Exchanged (BEJ) and Surabaya Stock Exchange (BES), now merged into
Indonesian Stock Exchange.
BFI is a major multi finance company in Indonesia that offers equipment leasing,
car and motorcycle financing throughout the country. After the financial crisis of
1998, the core business of BFI was changed to car consumer finance and
leasing of heavy equipment. The company has 37 branches located at all
strategic cities in Indonesia to handle processing and collecting receivables
more effectively.
BFI now ranks among twenty largest multifinance companies in Indonesia with
total assets of Rp 1.41 trillion at the end of 2006, and Rp 2.53 trillion at the end of
2007. Total outstanding credit on Dec 2007 was Rp 2.24 trillion.
Conclusion
However, with the people’s declining purchasing power amid rising prices, multi-
finance companies need to find a more effective strategies to maintain or grab
larger market share.
The big role of multifinance companies in attracting consumers into buying cars
has prompted car makers to establish their own multi-finance companies. Major
car brands like Toyota, Suzuki, Mitsubishi, already have certain multi-finance
companies. In fact multifinance companies providing financing service for certain
brands are more dominant in the country.
* * *
Backgrounds
In addition, heavy traffic jams such as in Jakarta makes motorcycle more efficient
as a means of transport.
The interest cut by Bank Indonesia lowering the interest rate on its promissory
notes (SBI) to 8% allows multifinance companies to put up a lower intererst rates
of 8.5%-17% on its credits to attract more clients.
Although there was non performing credits in the hands of clients among the
buyers of motorcyles the gain is still larger.
The growing number of investors in the industry such as TVS and Bajaj from
India, also contribute to expansion of the industry.
The setback in 2006 was followed with a resurge in 2007 indicating that
investment in the industry in the country is still highly feasible.
In 2006, the production fell to 4,458,886 units, as a result of the surge in the
prices of BBM toward the end of 2005, but in 2007, the production grew again to
4,725,000 units . See the following table.
Table – 1
Motorcycle production, 2003 - 2007
Types Production (units)
2003 2004 2005 2006 2007
Motor Cycles * 2,814,054 3,897,250 5,113,487 4,458,886 4,725,000
Growth (%) - 38.50 31.20 -12.8 5.97
Source: AISI
Note: *) Not including production of non AISI producers
Motorcycle sales
The figures represented motorcycle sales of both the producers grouped in the
association of motorcycle producers (AISI) and Non AISI producers.
Table - 2
Sales of motorcycles, 2003 - 2007
Types Sales (units )
2003 2004 2005 2006 2007
Motor Cycles 3,092,773 4,119,770 5,522,026 4,468,380 4,669,988
*)
Growth (%) - 33.20 34.04 -19.10 4.50
Source: AISI, Data Consult
Note: *) including non AISI products
The cub type dominates motorcycle sales with sales totaling 3,935,990 units in
2007, followed by scooter type with sales totaling 587,198 units and sport type
with sales totaling 146,800 units.
Table – 3
Sales of motorcycle by types
Type Sales (units)
2003 2004 2005 2006 2007
Cub 2,783,495 3,743,634 4,969,823 4,744,123 3,935,990
Sport 269,999 329,581 386,534 337,987 146,800
Scooter 39,279 46,555 165,660 386,270 587,198
Total 3,092,773 4,119,770 5,522,026 4,688,380 4,669,988
Source: AISI
Table – 4
Motorcycle producers and production capacity, 2007
Production
Name of producers Brands Type Capacity
(units/year)
Astra Honda Motor, PT Honda Cub, Sport, 3,000,000
Scooter
Yamaha Indonesia Motor Yamaha Cub, Sport, 2,400,000
Manufacturing, PT Scooter
Indomobil Suzuki International, PT Suzuki Cub, Sport, 1,500,000
Scooter
Kawasaki Motor Indonesia, PT Kawasaki Cub, Sport, 200,000
Scooter
Semesta Citra Motorindo, PT Kanzen Cub 120,000
Dan Motor Indonesia, PT Piaggio Scooter 90,000
Kymco Lippo Motor Indonesia, PT Kymco Scooter 50,000
Source: AISI
Producers said 80% of purchases of motorcycle are facilitated with credits from
multifinance companies. Most multifinance companies offer 10%-30% in advance
payment depending on the type of motorcycles.
In 2006, the amount fell to Rp 34.761 trillion. In 2007 the amount rose again to
Rp36.419 trillion when sales totaled Rp 60.697 trillion.
Table - 5
Estimate of credit provided by multifinance companies for
the purchases of motorcycles, 2004 - 2007
Credits provided by
Sales value multifinance
Year (Rp billion) companies
(Rp billion)
2004 45,320 27,192
2005 66,264 39,758
2006 57,936 34,761
2007 60,697 36,419
Source: AISI/Data Consult processed
Tabel - 6
Multifinance companies in motorcycle market
and outstanding credits, 2007
Outstanding
Share
Companies credits
(%)
(Rp billion)
Federal International Finance 7,793 21.40
Bussan Auto Finance 5,306 14.57
Wahana Ottomitra Multiartha 4,355 11.96
Summit Oto Finance 3,525 9.68
Suzuki Finance Indonesia 1,731 4.75
Adira dinamika Multifinance 1,524 4.18
Mandala Multi Finance 1,356 3.72
Subtotal 25,590 70.26
Other 10,829 29.74%
Total 36,419 100.0%
Source: AISI/Data Consult processed
Interest rates and time term offered are the main factors prompting buyers of
motorcycles to select certain muntifinance company.
The interest rates on credit offered by multifinance companies for the purchases
of motorcycles range from 8% to 17%, to be repaid in 1 to 3 years.
Multifinance companies have set higher Loan To Value (LTV) ratio for the
purchases of motorcycles that the amount of advance payment to be provided
by buyers is smaller. Generally the LTV ratios range from 10% to 30%,
depending on the prices of motorcycle. The higher the price the larger the
advance payment will become.
Table - 7
Main factors attracting buyers of motorcycles
Interest rate
Companies Term LTV ratio
per year
Federal International 20%-24% 1-3 year 80%-90%
Finance
Bussan Auto Finance 28%-30% 1-4 year 80%-90%
Wahana Ottomitra Multiartha 29%-31% 1-3 year 80%-90%
Summit Oto Finance 30%-32% 1-3 year 80%-90%
Suzuki Finance Indonesia 25%-26% 1-3 year 80%-90%
Adira dinamika Multifinance 30%-31% 1-3 year 80%-90%
Source: AISI/Data Consult processed
Federal International Finance is a subsidiary of the Astra Group offering credit for
the purchases of Honda motorcycles which are produced in the country by the
company group.
Wahana Otto Finance from 1997 to 2003, but starting in 2004 it also offers
credits for the purchases of Yamaha and Suzuki motorcycles.
Table - 8
Multifinance companies cooperating with ATPM/
motorcycle producers
Marketing Strategy
Skip instalment is a service product of the financing firm offering clients a roll
over in installment on certain occasions such as Idul Fitr, Christmas and the start
of new academic year.
FIF is Indonesia's leading financing company, with 215 retail outlets and 105
branch offices in 250 cities and towns nationwide, covering every province from
Aceh to Papua, serving over 2 million customers. FIF controls 67,4% of the
Honda credit sales market, with an established business network comprising
over 600 autorized Honda dealers.
PT Federal International Finance (FIF) provide financing service for the buyers
of Honda motorcycles produced by PT Honda Astra Motor (PT HAM). PT HAM
is presently the largest motorcycle producer in Indonesia.This company owns
99,99% of PT FIF and the remaining share by PT, Arya Kharisma, Tbk.
At present, FIF has set up joint financing with 12 banks. Among the banks are
Permata Bank, Bank Mega, Bank Mandiri, Bank Niaga, and NISP Bank, Permata
Bank contributes around 12% to the total joint financing scheme and the joint
financing schemes contributes around 65% to funds needed by FIF.
Started in Jakarta, PT BAF operation networks have now covered almost all
major cities in Indonesia. It has 113 branch offices with around 6,700 employees.
BAF serves more than 1,000 Yamaha showrooms and dealers. Up to now, the
number of clients of by BAF has reached more than 1.7 million individuals.
In March 15, 2000 the company's name was again changed with PT Wahana
Ottomitra Multiartha with shareholders including PT Wahana Artha Harsaka, PT
Wahana artha Mekarselaras and PT Propertindo Muktipersada.
Despite of decline in market in 2006, the financing sector still has a good
prospect. When people have weaker purchasing power they, being cash
strapped, would more likely buy motorcycles on credit. WOM Finance
succeeded in capitalizing on this opportunity by booking Rp 4 trillion in financing
service in 2006, or an increase of 9.2% from Rp 3.6 trillion in 2005.
The sales of new motorcycles reached 76%, or 303,231 units of the total number
of units sold with its credit facility in 2006, with total financing of Rp 3,4 trillion,
while the sales of used motorcycles reached 97,715 units with total financing of
Rp 600 billion. The motorcycles consisted of Honda making up 44.4%, Yamaha
35.8%, Suzuki 19.4% and other Japanese brands 0.4%.
PT SOF was established specially to provice financing service for the purchases
of motorcycles and Oto Multiartha focusing on car purchase financing. SOF has
expanded rapidly. Its total assets shot up from only Rp 278 billion in 2003 to Rp
4,343 billion in 2007.
PT Adira Dinamika Multi Finance Tbk, which has been operating since 1990, has
now become one of the largest financing companies providing credits for the
purchase of multi-brand automotive products in Indonesia, in term of market
share and total assets. It has over 12,500 employees and 245 outlets in
more than 110 cities in Indonesia. About two third of its 12,500 employees are
marketing and billing officers.
With sizable funding support from Bank Danamon, the company recorded new
financing service worth Rp 8.5 trillion in 2006 including 74,5% from motorcycle
financing and 25% from car financing. The company financed at least 12,2% of
the purchases of new motorcycles and 3.9% of new car purchases in Indonesia
in 2006.
The total number of its clients by 30 September 2007 was around 1.5 million or
increase by 20.1% from the same period last year.
In March 2004, Adira launched IPO (Initial Public Offering) after its acquisition by
PT Bank Danamon Indonesia Tbk one of the countyr’s largest private banks,
owned by the Temasek Group from Singapore. With the support from Bank
Danamon, the company continues to expand its business operations.
After the acquisition and the subsequent IPO, the company's shareholders are
currently Mega Value Profit Limited, British Virgin Island (17.42%), PT Bank
Danamon Indonesia Tbk, (75%) and Public (7.58%).
Adira Finance's sales value went up by 93% from Rp 3,421 billion in 2003 to Rp
6,611 billion in 2004. The number of motorcycles using its credit facility surged by
74% from 335,654 units to 583,454 units in the same period. The company,
therefore succeeded in expanding its market share in the motorcycle and car
sectors to 12.48% and 2.48% respectively (data source: AISI & Gaikindo) in 2004
from 12.23% and 0.70% respectively in the previous year.
Conclusion
In addition, motorcycles are more preferable for many people in large cities
plagued by heavy traffic jams almost every working days such as Jakarta. More
people choose motorcycles, which need less fuel, especially now with the
soaring fuel prices.
* * *
In the past three years Indonesia’s economy grew by 5.5%-6% annually driven
mainly by the consumption sector and exports of primary commodities especially
plantation and mining commodities.
The growing number of outlets of hypermarkets and specialty stores lining main
thoroughfares in large cities has changed the habit of many members of the
community especially urban community in buying electronic products from
electronic shops to hypermarket and specialty stores.
The industry has also grown thanks to macro economic stability and gradual cut
in interest rate on SBI to 8% at present from by the end of 2006.
The decline in the real income of the people following the oil fuel price hikes
contributed to boosting financing industry as more people, formerly having
enough fund to buy good in cash, have to use credit financing service.
In 2007, the value of financing the purchases of electronic products grew further
18% to Rp 6.7 trillion.
The expansion of modern retails selling electronic products makes it easier for
consumer finance industry to launch expansion as more consumers choose to do
the shopping in modern retail outlets. Almost all electronic products in
hypermarkets and specialty stores could be bought with consumer finance
facility.
Table - 1
Value of consumer finance service for the
purchases of electronic products
Year Financing value Growth
(Rp billion) (%)
2005 4,539 -
2006 5,730 26
2007 6,756 18
Source: BI, Data Consult/ICN processed
Most financing firms provide financing service for the purchases of motor
vehicles including cars and motorcycles. The numbers of financing companies
offering financing service for the purchases of electronic products are not many.
Among the largest players in this business area are PT Federal International
Finance (FIF), PT. Sunprima Nusantara Pembiayaan (Sunprima), PT Adira
Quantum Multifinance (Adira), GE Finance Indonesia (Sumber Kredit), and PT
Finansia Multi Finance (FMF).
The largest among them that offer financing service for the purchases of
electronic products in 2007 was PT Federal International Finance (FIF) with
credits amounting to Rp 750 billion followed by Sunprima Rp 569 billion, Adira
Rp 500 billion; GE Rp 308 billion; and FMF Rp 250 billion. FMF sets financing
target at Rp 575 billion this year.
Among the companies only Sunprima is integrated with sales outlets for
electronic products and furniture in the form of showroom named Columbia.
Sunprima was established by Columbia in 2003. Now Columbia has 600 outlets
in 400 cities in Indonesia.
Table - 2
Value of financing service for electronic products
by main players
Growth
Total value of financing
(%)
Companies (Rp billion )
2006 2007
PT Federal International Finance (FIF) 600 750 25
PT Sunprima Nusantara 451 569 26
PT Adira Quantum Multifinance 120 500 317
GE Finance Indonesia 102 308 202
PT Finansia Multi Finance (FMF) 130 250 92
Source: Data Consult
FIF started operation as a financing firm for Honda motorcycles. In April, 2005 it
launched financing service for other products like electronics product of Spektra.
FIF is wholly owned by PT. Astra International.
FIF seeks to establish its foothold outside large cities like Jakarta to avoid head
on collision with more powerful rivals. FIF teams up with investors which seek to
open electronic stores by opening outlets such as Spektra on Store. The
investors provide capital and FIF helps in the management.
In 2007, FIF targeted to open 12 outlets of Spectra on Store. So far FIF has
established cooperation with 7 investors.
Sunprima utilizes the wide networks of Columbia, which has gained good
reputation in service facility and sales. Its service facility is especially needed by
consumers far from service centers offered by electronic goods producers. In
2006, Sunprima reported net profit at Rp 15.13 billion.
Until 2005, the company still reported operating loss. That year the company
posted a loss of Rp 3.7 billion, but in 2006 it began to chalk up a net profit of Rp
4.4 billion.
Currently Sumber Kredit has 300,000 clients. The company cooperates with
Carrefour hypermarket.
FMF already has 27 branches all over the country including three in Sumatra, 16
in Java, 1 in Bali, 5 in Kalimantan, and 2 in Sulawesi.
The company has 150,000 clients. It cooperates with Bank BRI to facilitate on
line payment system.
The retail sector is a major partner of financing companies supporting each other
in expanding business notably in the electronic sectors. Retail sector especially
hypermarkets such as Carrefour, Giant and Hypermart are among major
business players in household electronic products such as TV sets, AC,
refrigerators and hand-phones.
The past several years saw a fast growth in the number of hypermarket outlets –
from 83 units in 2005, up to 90 units in 2006 and to 94 units in 2007. The number
of outlets is expected to increase further as the Lippo Group and Matahari Putra
Prima plan to open new outlets this year.
The Lippo Group plans to open 12 units of the outlets of its Hypermart in Java,
Sumatra and Kalimantan this year. The plan is estimated to cost around Rp1.5
trillion. The Group is set to increase the number up to 100 outlets in 2011.
Table - 3
Number of hypermarket outlets in Indonesia
Year Number Growth
(%)
2005 83 -
2006 90 4.4
2007 94 8.4
Source: Data Consult
Retail and electronic industries are major business partners of financing industry.
The expansion of retail and electronic industries will open wider market for
financing business. On the other hand the two industries receive indirect support
from financing industry.
The expansion of retail industry also support the growth of electronic industry
such as producers of TV set, refrigerators, AC and washing machines, which are
sold mainly in the outlets of hypermarket and other largest retail outlets such as
department stores and supermarket as well as special stores.
In 2006, sales of TV sets fell to 2.1 million units from 2.4 million units in 2005 as
a result of the sharp increase in oil fuel price hikes late 2005 that caused a deep
slump in 2006. Sales other electronic gods like refrigerators, washing machines
and AC also fell to 1 million units; 435,000 units and 437,000 units from 1.1
million units; 446,000 units and 571,000 units respectively in the same period.
In 2008, a strong growth of 20% is expected in the sale of electronic goods. The
market outside Java is predicted to grow stronger. In 2006, Java accounted for
60% of the market of electronic products, but in 2007 the percentage fell to 55%-
57%.
The shift in favor of regions outside Java was caused by higher increase in the
purchasing power of the people outside Java. The economy outside Java grew
faster with the increase in the prices of plantation commodities such as palm oil,
rubber and coffee and mining products such as coal, copper, gold and tin, which
are produced mainly outside Java.
Table - 4
Sales of main electronic products
Types of Growth Refrige- Growth Washing Growth Growth
TV AC
product (%) rators (%) machines (%) (%)
The consumer finance industry has so far expanded only in Java. In 2007,
around 68% of consumer finance credits were disbursed in Java, including
28.14% in Jakarta, 17.26% in West Java, 4.43% in Banten, 9.81% in East Java,
7.18% in Central Java and 1.52% in Yogyakarta.
Jakarta is still the largest economic centers in the country but its share of the
credits fell from 31% in 2006 as many consumer finance companies have begun
to expand their market to other largest city in Java. The regions outside Java
accounted for 32% of credit disbursed by consumer finance companies in 2007
including 19.8% in Sumatra, 4.28% in Sulawesi, 4.24% in Kalimantan and 3.5%
in Bali and East Nusa Tenggara.
Competition which is mainly in interest rate and service is tighter lately after
some main players offer credit with zero interest for the first six to 12 months
installments.
The brisk development of the mining, plantation and infrastructure sectors has
provided wider market for heavy equipment leasing industry.
In the past several years the prices of mining products such as coal, nickel and
copper, and plantation commodities like palm oil and rubber have continued to
scale up encouraging expansion of business in the sectors Indonesia.
The sectors are all export oriented, the impact of the 150% surge in the prices of
oil fuels (BBM) in Oct, 2005 was negligible, The condition is favorable for leasing
industry as 90% of the purchases of heavy equipment in the country is with
leasing.
Meanwhile, heavy equipment sales in 2007 rose after falling in 2006 as a result
of a surge in the BBM prices. In 2006, sales of heavy equipment dropped slightly
to 4,687 units from 4,993 units in the previous year before rising again in 2007.
In the first nine months of 2007 sales already reached 5,146 units including 1,670
units to the mining sector, 1,510 units to the plantaiton sector, 1,138 units to the
forestry sector and 828 units to the construction.
The largest sales are to the mining sector but the highest increase in sales of
78% was to the plantation sector in 2007.
Large infrastructure projects of the government also provide potential market for
heavy equipment.
The public works ministry had a budget of Rp 35.6 trillion for construction
projects in 2008, up 47% from Rp 24.2 trillion in 2007.
Table - 1
Value of heavy equipment leasing
In 2006, PT Orix Indonesia Finance (Orix) was the largest leasing company
offering credits to lease heavy equipment with leasing credit valued at Rp 2.10
trillion, followed by PT.Dipo Star Finance with leasing credits of Rp 1.86 trillion,
and PT. Caterpillar Finance Indonesia with leasing value of Rp 1.84 trillion, and
Chandra Sakti Utama Leasing Rp 813 billion. The leasing value of 10 largest
leasing companies in 2006 totaled Rp 10.41 trillion.
In 2007, Dipo Star took over from Orix as the largest leasing company providing
credits for the leasing of heavy equipment.
Dipo Star provided credits totaling Rp 2.12 trillion for the leasing of heavy
equipment, followed by Orix with credits valued at Rp 2.06 trillion, Chandra Sakti
Utama Leasing Rp 1.41 trillion, and Caterpillar Finance Indonesia Rp 1.39 trillion.
That year the value of leasing credits by 10 largest leasing companies totaled Rp
12.39 trillion.
Table - 2
Largest heavy equipment
leasing companies
Dipo Star
This company was established in November, 1983. In June 1989, the name of
PT. Dipo Star Leasing was changed with PT. Dipo Star Finance and in 1992
Mitsubishi Corporation of Japan acquired a stake in Dipo Star that its status was
changed from Indonesian private company into a joint venture. Since then in
addition to leasing PT Dipo also operates as consumer finance and factoring
company
In 2006, the company reported Rp 180 billion in net profit. In the first half of 2007
it already posted Rp 150 billion in net profit.
Dipo Star’s lessees are required to provide guarantee in deposit with value 20%
of the value of heavy equipment.
Orix
Orix is a subsidiary of Orix Corporation which is based in Tokyo. In 1975 Orix
Corp oepend a branch in Indonesia with the name of PT Orient Bina Usaha
Leasing, The nAme was later changed with Orix Indonesia Finance.
Heavy equipment, industrial machines and vehicles accounts for 30% of finance
lease each and operating lease is used for information technology equipment
and vehicles each accounting for 50%.
Orix reported Rp 793.3 billion in come in 2006; up 7.89% from Rp 735.2 billion in
the previous year.
Development of the mining sector will determine demand for heavy equipment in
the country. The sector is the largest user of heavy equipment.
The country’s coal production grew 11.3% annually in 2004 - 2007 with
production averaging 158,354 tons a year. A decline was recorded only 2007,
down 5.9% to 170,244 tons from 180,896 tons in 2006.
The strong growth in the country’s coal production in the past years followed the
price rise of that commodity.
Table - 3
Indonesia’s coal production
2003 112,786 -
2004 129,165 14.5
2005 153,111 18.5
2006 180,896 18.1
2007 170,244 -5.9
Average 158,354 11.3
Source: ESDM, processed
Meanwhile, the plantation sector has also expanded in the past several years
both in acreage and production such as in the production palm and rubber
plantations, two largest plantation commodities of the country.
The country’s production of rubber in 2007 was recorded at 2.45 million tons, up
3.6% from 2.36 million tons in 2006. This year the production is forecast to rise
further to 2.53 million tons.
Similarly, the acreage of oil palm plantations has also expanded to reach 6.42
million hectares in 2007 from 6 million hectares in 2006.
The country’s production of palm oil has also continued to scale up in the past
several years.
In 2007, production totaled 14.15 million tons, up from 13.39 million tons in 2006.
The production of palm oil is predicted to continue to scale up in the next several
years boosted by strong demand in international market.
Table - 4
Rubber and oil palm plantations
and production
Banks have been the main sources of fund for financing companies. Based on
data at Bank Indonesia loans provided by banks for financing companies in 2007
totaled Rp 36.69 trillion or an increase of 24.66% from Rp 29.43 trillion in 2006.
Bonds are only smaller sources of fund for financing companies. In 2007, bonds
issued by financing companies were valued at Rp12.84 trillion or an increase of
27% from Rp 10.08 trillion in 2006. In 2008, SANF plans to issue bonds to
diversify its sources of fund.
In 2007, funds used by SANF came from banks in the form of joint financing.
SANF used loans from five banks valued at Rp 550 billion and Rp 50 billion in
private placement.
Buana, which has also used funds mainly from banks, also plans to issue bonds
this year. In 2007, it used Rp 450 billion in syndicated loans from Bank NISP and
Bank Mega.
Around Rp 140 billion of the loan fund were already used in April 2007 to repay
a bilateral loan from Bank NISP, and 65% of the remaining Rp 310 billion were
used to finance leasing credit and 35% for consumer finance.
The expansion of plantation and mining sectors outside Java opens potential
market for heavy equipment leasing industry. A number of leasing companies
have been prompted to open branches near plantation and mining areas to be
close to the market.
Dipo Star has 17 branches including 9 in Sumatra, 7 in Java and Bali and one in
Sulawesi.
Dipo Star has opened new branches in district municipal cities such as in Muara
Bungo in Jambi, and Rantau Prapat in North Sumatra where plantations are
expanding. It also has opened branches in South Jakarta and North Jakarta.
Dipo Star looks aggressive in expanding market.
Orix have 7 branches and 2 of them are in Sumatra; 5 in Java and one in
Kalimantan. All of its branch offices are in provincial cities.
Table - 5
Number and locations of branch office of
heavy equipment leasing companies
Leasing Number of Java Kalimantan Sumatra Other
companies branches areas
Dipo Star 18 6 9 2
San Finance 9 2 4 3
Orix 8 5 1 2
Buana Finance 12 3 2 5 2
Source: Data Consult/ICN
Major heavy equipment leasing companies in Indonesia are affiliated with heavy
equipment producers or dealers. Companies like CSUL, Caterpillar, Dipo Star,
SANF, and Komatsu Astra are partly or wholly owned by producers or dealers
heavy equipment.
Dipo Star is 85% owned by Mitsubishi Automobile Holding Asia BV, a subsidiary
of Mitsubishi, which is the maker of Mitsubishi machines, cars, and heavy
equipment.
The remaining 40% shares are 35% owned by Marubeni Corp and 5% by PT.
Marubeni Indonesia. Marubeni is a widely diversified corporation with business
units in energy, mineral, steel, textile and financial sectors, etc. Komatsu Astra is
50% owned by PT. Sedaya Multi Investama, which is a subsidiary of PT. Astra
International.
PT. Astra International has a number of business units closely related to heavy
equipment such as dealers of Komatsu heavy equipment (United Tractor);
plantation company (Astra Agri); mining service contractor (Pamapersada
Nusantara); s and mining company (Dasa Eka Jasatama).
The remaining 50% is owned by Komatsu Asia Pacific Pte, Ltd. which is the
maker of Komatsu heavy equipment. Among the major leasing companies, only
Orix is without affiliation with any heavy equipment producers or related
companies. The fact that most heavy equipment leasing companies are affiliated
to heavy equipment producers or major users of heavy equipment makes
competition in the market among the leasing companies unhealthy.
Table - 6
Heavy equipment leasing companies and
parent companies or affiliates
Leasing Major Parent Business related to heavy Brands
companies shareholders companies equipment of parent facilitated/
companies produced
- Leasing used heavy
equipment specially for
mining service
PT. Chandra
PT. Trakindo: contracting company
Sakti Utama PT. Trakindo Caterpillar
99.9 % - (Cipta Kridatama)
Leasing
- Fabrication and
contracting company
(Sanggar Sarana Baja)
Table – 6 cont’d
Leasing Major Parent Business related to heavy Brands
companies shareholders companies equipment of parent facilitated/
companies produced
Caterpillar
- Manufacturing heavy
Financial
Caterpillar, Inc equipment Caterpillar
PT. Caterpillar Services Corp:
Finance 85 %
Indonesia - Manufacturing heavy
PT. Natra Raya: Caterpillar, Inc equipment Caterpillar
15 %
Mitsubishi
- Manufacturing heavy
Automobile
Mitsubishi Corp equipment Mitsubishi
Holding Asia BV:
PT. Dipo Star
85 %
Finance
PT. Pahalamas - - -
Sejahtera: 15 %
Yayasan Yayasan
PT. Orix
Kesejahteraan Kesejahteraan
- Investment -
Karyawan Bank Karyawan Bank
Indonesia: 15 % Indonesia
- Dealer heavy equipment
(United Tractor)
- Plantation (Astra Agri)
Sedaya Multi - Mining service
Astra
Investama: contracting Komatsu
International
60 % (Pamapersada
Nusantara)
SAN Finance
- Mining (Dasa Eka
Jasatama)
Marubeni
Marubeni - Manufacturing
Corporation: -
Corporation
35 %
PT. Marubeni Marubeni - Manufacturing
-
Indonesia: 5 % Corporation
- Dealer heavy equipment
(United Tractor);
- Plantation(Astra Agri);
Sedaya Multi
Astra - Mining contracting
Investama: Komatsu
International (Pamapersada
PT. Komatsu 50 %
Nusantara)
Astra Finance
- Mining (Dasa Eka
Jasatama)
Komatsu Asia Komatsu Asia
- Manufacturing heavy
Pacific Pte, Ltd: Pacific Pte, Ltd Komatsu
equipment
50 %
Source: Data Consult/ICN
* * *
The reason perhaps is the high risk carried by this business in addition to the fact
that it is not known much by the people. The players need good knowledge of the
market and its prospects. Lack of skilled human resources is also a factor
hampering the growth of the business.
Jakarta leads other regions or cities in the amount of credit services provided by
factoring companies. Its share, however, tended to decline. In 2006, its share of
the market fell to 43% or with credit amounting to Rp 488.44 billion from 53%
with credit amounting to Rp 579.75 billion.
The type of recourse is more dominant in factoring service. The value of recourse
factoring credit in 2005 and 2006 reached 80% with non recourse type making up
the remaining 20%.
In 2006, the value of factoring credits totaled Rp 1.3 trillion up 69% to Rp2.2
trillion in 2007.
Table - 1
Value of factoring credits
2005 1,329 -
2006 1,301 -2.1
2007 2,200 69.1
Source: Data Consult
In 2005, the recourse type of factoring service accounted for Rp 1.08 trillion or
81.7 % of the total credits. In 2006, the amount rose to Rp 1.12 trillion or 83.8%.
Table - 2
Value and composition of factoring credits
Year Recourse Non recourse Share Share
(Rp billion) (Rp. billion) (%) (%)
2005 1,086.52 242.93 81.73 18.27
2006 1,123.49 217.15 83.80 16.20
Source: Data Consult
Main players
There were few factoring companies extending credit more than Rp 100 billion in
2006. Among hem were Koexim BDN Finance with credit amounting to Rp 324
billion; Primus Finance Services Rp 199 billion; Transasia Multifinance Rp 185
billion; Clemont Finance Indonesia Rp 132 billion; Putra Modern Finance Rp 115
billion; and Clipan Finance with credit amounting to Rp 102 billion.
The value of credits from the 6 largest players totaled only Rp 611 billion and Rp
1.05 trillion in 2005 and 2006 or 47% and 48% respectively of the total value of
factoring credits that year.
Table - 3
Main players in factoring business by credit value
Companies 2005 2006 Status
Koexim BDN Finance 163 324 Joint venture
Primus Finance Services 117 199 Joint venture
Transasia Multifinance 82 185 Indon. private company
Clemont Finance Indonesia
Corp 134 132 Joint vent.
Putra Modern Finance 115 115 Indon private company
Clipan Finance Indonesia 0 102 Joint venture
Anugrah Utama Finance 91 88 Indon private company
Agro Finance Indonesia 0 82 Indon private company
Permata Finance Indonesia 0 73 Indon private company
Danpac Finance 105 61 Indon private company
Source: Data Consult
grew fast in Banten with credit amounting to Rp 218 billion or 19% of the total
value of factoring credits in the country. The value represented a sharp increase
from 2005.
Banten gains from the fact that it shares borders with Jakarta, the country’s
administration and economic centers. Expansion has also been recorded in
Central Java, ad East Java but at a slower rate as shown in the following table.
Table - 4
Value of factoring credits with recourse by regions
The manufacturing, construction and service sectors are the main used of
factoring credits with recourse in the country.
The value of factoring credit received by the manufacturing sector grew form Rp
270 billion in 2005 to Rp 377.7 billion in 2006. The credit received by the
construction sector rose from Rp124 billion in 2005 to Rp 175.7 billion in 2006
and credits for the business service sector from Rp 51.6 billion to Rp 67.2 as
shown in the following table.
Table - 5
Value of factoring credits with recourse
by sectors
Sector 2005 2006 Share Share
(Rp. billion) (Rp. billion) (%) (%)
Manufacturing sector 270.14 377.69 24.86 33.62
Construction 123.91 175.74 11.40 15.64
Lanjutan tabel - 5
Sector 2005 2006 Share Share
(Rp. billion) (Rp. billion) (%) (%)
Trade, restaurant 87.80 44.46 8.08 3.96
and hotel
Business services 51.58 67.22 4.75 5.98
Other 553.09 458.4 50.90 40.80
Total 1,086.52 1,123.49 100 100
Source: Data Consult
Factoring business carries high risk as it needs good knowledge of the market
and its prospects. Lack of skilled human resources in this business sector has
caused high non performing loans (NPL) recorded by the business.
In 2007, the NPL of multi-finance industry totaled Rp 2.21 trillion or 2.05% of the
total financing credits that year of Rp 107.7 trillion. Factoring recorded the
highest rate.
The NPL rate rose slightly from 1.5% or Rp 253.5 billion in 2006, but lower in
amount than Rp 261.7 billion in 2005.
Table - 6
NPL of factoring industry without recourse
and with recourse
* * *
share of only 45% valued at around Rp 1.45 trillion of the total market value of Rp 3
trillion in 2007. The market share fell 5 percentage points from 2006, wheareas
domestic requirement rose form only Rp 2.8 trillion in 2006.
* * *
Table cont’d
BII Finance Center
Office address: Wisma Kodel 5th Floor, Jl. HR. Rasuna Said Kav. B4
Jakarta - 12920
Phone : 520 1730, 522 2320
Fax No.: 252 0992, 252 4484
Website: www.biifinance.co.id
E-mail: nate@biifinance.co.id
Line of Business: Multifinance industry
Management Mr. Albertus Alex Hermanto
Mr. Alexander
Mr. Andreas Sudarto Samiadji
BNI Multifinance
Office address: Atrium Setiabudi Building, 8th floor Suite 806-808
Jl. HR. Rasuna Said Kav. 62, Jakarta
Phone : Hotline: (021) 5210303;
(021) 521 0308
Fax No.: (021) 521 0306
Website: www.bnimultifinance.com; www.bnimultifinance.co.id
Line of Business: Multifinance industry
Management/contact: Mr. Prabowo (President Director)
Mr. Sayuti Melik
Mr. Gaguk Fauzi Santosa
Bussan Auto Finance
Office address: Sentral Mulia building 12th floor,
Jl. HR Rasuna Said Kav. X-6 No. 8, Jakarta – 12940
Phone : (021) 522 2166
Fax No.: (021) 522 2165, 522 2102
Website: http://www.bussan.co.id
E-mail: bodaa@bussan.co.id
Line of Business: Multifinance industry
Management/contacts: Mr. Matsuo Harada
Mr. Razali Nafiah
Mr. Yoshimi Namba
BCA Finance
Office address: Wisma Milenia 1st Floor, Jl. M.T. Haryono kav 16
Jakarta - 12810
Phone : (021) 831 0222
Fax No.: (021) 831 0221, 831 0229, 831 0338
Website: www.bcafinance.co.id
E-mail: hrdrecruitment@bcafinance.co.id
Line of Business: Multifinance industry
Management/contacts: Mr. Henry Koenaifi (President director)
Mr. Roni Haslim
Mr. Amirdin Halim; Mr. Petrus Santoso Karim
Table cont’d
Clemont Finance Indonesia
Address: Wisma KORINDO, 2nd Floor, Jl. MT. Haryono Kav. 62
Jakarta - 12780
Phone : (021) 797 6363
Fax No.: (021) 797 6368, 797 6371
Website: www.korindo.co.id
E-mail: cfi@korindo.co.id
Line of Business: Multifinance industry
Management: Mr. Yong Won Cho (President director)
Mr. Hee Woo Park
Mr. Mulia Wijaya
Clipan Finance Indonesia Tbk.
Address in Jakarta : Gedung Wisma Slipi, Lt 6, Jl. Letjen S. Parman Kav.12
Jakarta - 11480
Phone: (021) 530 8005; Fax : (021) 530 8026/27
Website: http://www.clipan.co.id
E-mail: clipanacc@hotmail.com; clipanacc@yahoo.com
Line of Business: Multifinance industry
Management: Ms. Gita Puspa Kirana Darmawan (President director)
Mr. Irwan Djaja
Ciptadana Multifinance
Address: Jl. Jend. Gatot Subroto Kav. 35-36, Jakarta - 12950
Phone : (021) 523-2525; 523 2500
Fax No.: (021) 529-00366
Website: http://www.ciptadana.com
E-mail: customerservice@ciptadana.com;
sentosahardi@ciptadana.com
Line of busieness: Multifinance industry
Management: Mr. Benny Haryanto Djie (President Director)
Mr. Lily Widjaya (Director)
Mr. Hardi Sentosa
Dipo Star Finance
Address: Wisma Sejahtera, 5th Floor, Suite 501
Jl. Letjend. S. Parman Kav. 75 Slip, Jakarta - 11410
Phone : (021) 548 2335, 532 2505
Fax No.: (021) 548 1680
Website: http://www.dipostar.com
E-mail: hrd@dipostar.com
Line of Business: Multifinance industry
Management: Mr. Hiroshi Miyazeki (President Director)
Mr. Sudarman
Mr. Fuyuhiko Nakamura
Mr. Tetsuya Katori; Mr. Fumio Kuwayama
Table cont’d
Finansia Multi Finance
Address: Graha Paramita Building, 8th Floor
Jl. Denpasar Raya Blok D-2 Kuningan, Jakarta - 12940
Branch: Sumatra, Java, Bali , Kalimantan and Sulawesi
Phone : (021) 252 3646 (hunting)
Fax No.: (021) 252 3648
Website: http://www.finansia.com
E-mail: herman@finansia.com
Line of Business: Multifinance industry
Management: Mr. Yap Tjay Hing (President director)
Mr. Herman Setya Budi
Federal International Finance
Address: Gedung Amdi B, 1st Floor Jl. Gaya Motor Raya No. 8,
Sunter, Jakarta Utara - 14430
Phone : (021) 653 00708
Fax : (021) 653 00707
Website: http://www.fifkredit.com
E-mail: arie@fifastra.co.id
Line of Business: Multifinance industry
Management: Mr. Suhartono (President director)
Mr. Thaufik Noograha
Ms. Arietta Adrianti
Mr. Rusdimin Adikarta; Mr. Dandy Soelip
GE Finance Indonesia
Address: Gedung BRI II, 25th Floor, Jl. Jend. Sudirman No.42-46
Jakarta - 10210
Phone : (021) 574 4966, 574 5228, 574 5033
Fax No.: (021) 574 4933, 574 5034
Website: http://www.ge.com/id
Line of busieness: Multifinance industry
Management: Mr. Harry Sasongko (President Director)
Mr. Indra Supriadi (Director)
Mr. Hadi Rusli; Mr. Chairul Rachman
PANN Multifinance
Address: Jl. Cikini IV No. 11, Jakarta - 10340
Phone : (021) 3192 2003; Fax No.: (021) 3192 2980
Website: http://www.pannmf.co.id/
E-mail: pannmf@rad.net.id
Line of Business: Multifinance industry
Management: Mr. Ibnu Wibowo (President Director)
Mr. Hendro Wibowo
Mr. Bimo Wicaksono
* * *
1. ECONOMIC INDICATORS
* * *
(Trillion Rupiahs)
Industrial origin At Constant Price 2000
2004 2005 2006 2007
Agriculture, Livestock, Forestry 252.9 254.4 262.4 271.6
and Fishery
Mining and Quarrying 160.7 162.6 168.0 171.4
Manufacturing Industry 469.1 491.7 514.1 538.1
Electricity, Gas and Water Supply 11.1 11.6 12.3 13.5
Construction 97,5 103.4 112.2 121.9
Trade, Hotel, and Restaurant 271.2 294.4 312.5 338.9
Transport and Communication 95.8 109.4 125.0 142.9
Financial, Ownership & Business 150.9 162.0 170.1 183.7
Services
Services 151.4 160.0 170.7 182.0
GDP 1,660.6 1,749.5 1,847.3 1,964.0
GDP without oil and gas 1,511.8 1,604.2 1,703.6 1,821.4
Source: BPS (Central Bureau of Statistic)
* * *
OIL PRICES
ITEM Market Latest 1 month 3 months One year
Date Price ago Ago Ago
CRUDE OIL PRICE
(US$/Barrel)
- Sumatran Light 1) Tokyo 3/31/2008 79.22 68.34 65.25 53.22
- Arabian Light 2) Europe 3/31/2008 85.36 72.45 71.43 56.46
- Arabian Heavy 2) Europe 3/31/2008 97.55 85.19 83.15 59.10
- Brent 2) Europe 3/31/2008 102.34 88.25 93.46 66.27
- W. Texas 2) - 3/31/2008 104.45 101.15 97.34 67.35
REFINED PRODUCT
(US$/Gallon)
- Fuel Oil 2) New York 3/31/2008 .4965 .4865 .5520 .5642
- Gasoline, New York 3/31/2008 .4237 .3834 .4546 .4440
Premium 3)
Sources: 1) FEER - Telerate, 2) AWSJ- Dow Jones International Petroleum
Report, 3) AWSJ - Oil Buyer Guide
6. Total money supply (Rp trill.) 223.7 253.8 281.9 361.0 424.4
Increase in 12 months (%) 16.6 11.8 12.9 9.4 6.0
8. Comm. bank deposit (Rp trill.) 902.3 965.0 1,134.0 1,298.7 1,413.7
Increase in 12 months(%) 6.8 6.7 7.0 6.6 6.6
* * *
Company : ………………………………………………………………………………………..
Address :…………………………………………………………………………………………
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