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ISSN 0853-2086

INDONESIAN COMMERCIAL NEWSLETTER

MONTHLY REPORT

MARKET INTELLIGENCE REPORT ON


MULTI-FINANCE INDUSTRY IN INDONESIA

Indonesian Commercial Newsletter


Since 1978
Published by PT Data Consult
Founder : Sulaeman Krisnandhi
Editor-in-Chief : D. Ganjar Sidik
Senior Editors : - Hendrawan Tranggana
- Agustina R. Effendy

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:

CONFIDENCE IN INDONESIAN FINANCIAL INDUSTRY GROWING.........................1

¾ INDUSTRY PROFILE:

MULTI-FINANCE INDUSTRY SHINING........................................................................6

Current issue ..................................................................................................................6


Multi-finance products and services ...............................................................................7
Development of multi-finance companies ......................................................................7
Main players .................................................................................................................10
Performance of multi-finance industry.........................................................................13
Financing value Rp 107.7 trillion ..................................................................................15
Distribution of financing services..................................................................................19
Marketing strategy........................................................................................................19
Source of funds ............................................................................................................21
Government regulation and policy................................................................................25
Conclusion and prospects ............................................................................................26

¾ COMPANY PROFILE:

ASTRA GROUP CONTROLS AUTOMOTIVE CREDIT FINANCING BUSINESS ......28

¾ AUTOMOTIVE FINANCE:

MULTI-FINANCE INDUSTRY MAJOR DRIVER OF CAR SALES IN INDONESIA ....35

Surge in car sales early 2008.......................................................................................35


General description of car industry...............................................................................35
Multi-finance companies dominate system of car purchases......................................37
Factors to select financing companies .........................................................................39
Profiles of main multifinance companies ......................................................................40
Conclusion ...................................................................................................................43

MULTI-FINANCE COMPANIES CREATE SYNERGY WITH


MOTORCYCLE PRODUCERS....................................................................................44

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

March 2008 - Indonesian Commercial Newsletter i


List of Content
Main players in financing business .............................................................................. 47
Main factors to select multi-finance companies in motorcycle market ......................... 48
Cooperation between ATPM and multi-finance companies creates synergyt.............. 48
Marketing strategy ....................................................................................................... 49
Profiles of multi-finance companies ............................................................................. 50
Conclusion ................................................................................................................... 53

¾ CONSUMER FINANCE:

GROWING CONSUMPTION AND MONETARY STABILITY BOOST GROWTH OF


CONSUMER FINANCE INDUSTRY IN ELECTRONIC SECTOR............................... 54

¾ LEASING:

LEASING DOMINATES FINANCING OF HEAVY EQUIPMENT................................ 61

¾ FACTORING:

FACTORING INDUSTRY IN INDONESIA REMAINS IN THE DOLDRUMS............... 70

¾ CORPORATE NEWS IN BRIEF:

Smart to acquire Sanex ............................................................................................... 74


Bank Mandiri’s revitalization credit for PTPN X............................................................ 74
Elnusa set to chalk up net profit at US$ 22 million this year ........................................ 74
Matahari sales exceed US$ 1 billion ............................................................................ 75
Adam Air operation suspended.................................................................................... 75
CPP to increase investment to finance planting of seedlings ...................................... 75

¾ ECONOMIC NEWS IN BRIEF:

Indonesia-Brazil to cooperate to develop bio-ethanol fuel ........................................... 76


Surplus in balance of payments narrowing in 2007 ..................................................... 76
Exports of textile and garments predicted to rise 10% in 2008 .................................... 76
Indonesia ranks among 25 largest investment destination countries........................... 77
State budget deficit jacked up by soaring oil prices ..................................................... 77

¾ APPENDICES:

Directory of Multi-finance companies in Indonesia....................................................... 78

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

* * *

ii Indonesian Commercial Newsletter - March 2008


FOCUS

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.

However, they warned of the need to observe developments in the share


markets both domestic and regional markets.

March 2008 - Indonesian Commercial Newsletter 1


Focus

Bank Indonesia noted strong growth of 25.5% in bank credits in 2007


overshooting the target of 22% set for that year followed by improvement of other
banking indicators. Also noteworthy is the mind boggling increase in net profit
reported by banks in the past two years -- up from a total of Rp 3.2 trillion in
2005 to Rp 49.8 trillion in 2007.

Table - 1
Indonesian banking indicators
(Rp trillion)
No Items Dec Dec Dec Dec
2004 2005 2006 2007

1 Collection of Funds 1,076.50 1,252.20 1,434.20 1,680.20


1 Loans received 9.80 11.40 12.90 14.30
2 Securities issued 14.30 13.40 14.90 17.30
3 Third party funds 963.10 1,127.90 1,287.00 1,510.70
(DPK)
a In Rupiah 818.20 930.20 1,093.30 1,284.70
b Foreign exch. 144.90 197.80 193.70 226.00
4 Inter-bank liabilities 89.40 99.40 119.50 137.80
2 Fund channeling 889.50 1,010.50 1,273.70 1,480.10
1 Bank Indonesia 94.10 54.30 179.00 203.90
promissory notes
2 Other securities **) 90.80 60.80 99.00 85.20
3 Inter-bank assets 103.50 159.10 156.80 139.80
4 Participation 6.20 6.10 5.90 5.60
5 Credit *) 595.10 730.20 832.90 1,045.70
a Rupiah 459.10 584.40 179.00 810.40
B Foreign exch. 135.90 145.80 99.00 235.30
3 Asset 1,272.30 1,469.80 1,693.50 1,986.50
4 Capital 118.60 115.90 134.50 193.70
5 Performance
1 Non Performing Loan
a Value 34.24 60.60 58.10 48.60
b Ratio to total credit 5.75 8.30 7.00 4.60
(%)
2 Profit/loss 5.09 3.20 40.50 49.86
a Operational 14.91 -0.30 27.70 35.04
b Non Operational -9.83 3.50 12.80 14.82
3 Net Interest Margin 6.32 6.20 7.70 8.90
6 Note:
1 Number of banks 133.00 131.00 130.00 130.00
2 Number of bank offices 7,939.00 8,236.00 9,110.00 9,680.00
Source: Bank Indonesia

Sales of BII to Maybank


Improved performance of the country’s banking industry has increase the
confidence of foreign investors in the country’s banking industry.

2 Indonesian Commercial Newsletter – March 2008


Focus

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.

BII selling price hit record


The sales of the 56% stake in BII represented a big profit for Temasek Holding
Singapore as well as Kookmin Bank Korea which joined in a consortium in 2003
to buy 51% of BII shares only at a price of US$ 217 million. The selling price paid
by Maybank was a new record in banking share sales in the country even in
Asia. The consortium Sorak bought the 51% stake in BII from the Indonesian
banking rescue agency BPPN at a price to book value (PBV) of 1.32 in 2003.

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.

Indonesian Commercial Newsletter – March 2008 3


Focus

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

4 Indonesian Commercial Newsletter – March 2008


Focus

Conclusion

The increase in PBV recorded by Indonesian banks reflected improved


confidence of foreign investors in the country’s banking industry. Amid the
devastating impact of the global financial crisis, Indonesian banking industry has
continued to expand. The central bank has assumed tight control over banking
operation because of the trauma of monetary crisis that almost crippled the
country’s banking industry. The central bank has been careful in observing the
prudential banking principle.

Improvement of the banking performance is also reflected by the decline in non


performing loan (NPL) ratio.

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

In our February 2008 edition page # 9 and # 28 we published a story with a


paragraph not properly and fully quoted from the source, reading: “and asbestos
and building material manufacturing and casting industry under PT Eternit
Gresik” The full paragraph should read as follows:

“PT Eternit Gresik – part of Belgian International Group Etex - was


established in 1972 and has grown to be a leading company among
fiber cement producers in Indonesia, by using different technologies
than the other local producers: all of the building boards (Calcium
Silicate Boards, autoclaved), and roofing sheets producers by PT
Eternit Gresik are 100% of asbestos free”.

Indonesian Commercial Newsletter – March 2008 5


INDUSTRY PROFILE

MULTI-FINANCE INDUSTRY SHINING THE BRIGHTER

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.

The strong growth of multi-finance industry has made it an interesting target of


acquisition by investors especially banks. Bank Danamon has acquired Adira
Finance and Bank Internasional Indonesia took control of WOM Finance. The
move was followed by other banks which are interested in expanding business
in consumer finance. State owned Bank Mandiri also has plans to acquire a
number of multi-finance companies and five Regional Development Bank owned
by regional administrations said they would soon acquire a number of multi-
finance companies.

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

6 Indonesian Commercial Newsletter – March 2008


Industry Profile

Finance, PT JRD Finance Utama, PT Primarindo Finance Corporation, and PT


Primadana Putra Finance. On the other hand a number of new companies have
secured operating license including PT Al-Ijarah Indonesia Finance, PT Mega
Central Finance and PT Mega Auto Finance. This report presents details about
development of multi-finance industry including their types of activity, growth of
financing value and assets, etc.

Multi-finance products and services

Multi-finance industry in Indonesia is under supervision of the Financing and


Guranteeing Bureau of the Capital Market and Financial Agency Watch Dog
(Bapepam LK) of the finance ministry. Multi-finance industry includes leasing,
factoring, consumer finance and credit card financing.

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.

Consumer finance (consumer credits)


Consumer finance is a financing service provided by a company for the
procurement of certain consumer goods or services to be repaid by installments
in a certain period.

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.

Development of multi-finance companies

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

Indonesian Commercial Newsletter – March 2008 7


Industry Profile

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

Multi-finance companies by status


Most or around 76.6% or 157 of multi-finance companies are Indonesian private
companies and 22.9 or 45 are joint venture companies and one of state company
- PT. PANN Multi-finance, which operates in the procurement of sea vessels.
Joint venture companies are generally stronger financially with support from their
foreign shareholders.
Table – 2
Multi-finance companies by status
Status Number of Share
Companies (%)
State companies 1 0.5
Private companies 157 76.6
Joint venture 45 22.9
Total 205 100.0
Source: Finance ministry

Ownership of multi-finance companies


Owners of multi-finance companies include banks, company group, brand
holding sole agents (ATPM) of cars and foreign principals of car makers
operating in financial service business. Powerful financing companies are only
those affiliated to banks or car makers and ATPM.

8 Indonesian Commercial Newsletter – March 2008


Industry Profile

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

Indonesian Commercial Newsletter – March 2008 9


Industry Profile

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

Multi-finance companies by types of business


Most multi-finance companies operate in consumer finance accounting for 116
companies or 56.6% of the total number of multi-finance companies in the
country, followed with 64 companies operating in leasing business and 23
companies in factoring and 2 in credit card business. The two multi-finance
companies issuing credit cards are GE Finance and Dinner’s Club. Multi-finance
companies operating in credit card business have to compete against around 20
banks both state banks, foreign banks and Indonesian private banks issuing
credit cards.
Table – 5
Multi-finance companies by types of business, 2007
Type of business Number of Share
Companies (%)
Leasing 64 31.2
Factoring 23 11.2
Consumer finance 116 56.6
Credit card 2 0.10
Total 205 100.0
Source: Finance ministry

Main players

Big players in consumer finance


Companies operating in consumer finance offer financing service mainly for the
purchases of cars and motorcycles, and electronic goods like TV, refrigerators,
AC, washing machines, DVD players, etc.

10 Indonesian Commercial Newsletter – March 2008


Industry Profile

Among big players in consumer finance service are:


Federal International Finance (FIF) which was established in 1989 with the name
of PT. Mitrapusaka Artha Finance. In 1991, its name was changed with PT.
Federal International Finance (FIF), with the majority shares held by PT. Astra
International of the Astra Group. FIF operates in financing the purchases of
Honda motorcycles, which are produced by PT. Astra Honda Motor, a subsidiary
of the Astra Group. FIF has expanded operation to financing the purchases of
electronic goods through FIF Spektra and in sharia financing through FIF
Syariah. FIF has financial support mainly from Bank Permata, which is partly
owned by the Astra Group.

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.

Main players in leasing business are


Central Java Power (CJP) which is a subsidiary of PT. PLN. In May 2003 CJP
and PLN resumed the construction of a coal fired power plant (PLTU) of Tanjung

Indonesian Commercial Newsletter – March 2008 11


Industry Profile

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.

Main Players in Fcatoring Financing


Factoring financing business has not expanded as expected in the country.
There are few transaction of companies transferring claims to financing
companies. Therefore, business players in this sector are few in number.

The main players in this business sector are:


• Koexim Mandiri Finance
• Clemont Finance Indonesia Corp

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.

GE Finance Indonesia is a subsidiary of GE Capital, a multinational company


with assets more than US$ 425 billion based in the United States. GE Finance is
the issuer of Master Card. GE Finance also issues a number of other credit cards
such as Smart Card in cooperation with Sumber Kredit and Kartu Belanja in
cooperation with Carrefour, a French based hypermarket having many outlet in
Indonesia. Currently GE Finance has around 1.1 million card holders.

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.

12 Indonesian Commercial Newsletter – March 2008


Industry Profile

Performance of multi-finance industry

Assets of multi-finance industry growing by 27.4% per year


In the period of 2003-2007 total assets of multi-finance companies grew by
27.4% per year. In 2003, assets were valued at Rp 50.1 trillion. In 2007, the
assets shot up to Rp 127.3 trillion.

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

Largest multi-finance companies in assets


There are 55 financing companies with assets from Rp 100 billion to - Rp1 trillion;
59 with assets valued at less than Rp 100 billion and 23 with assets exceeding
Rp 1 trillion. The rest are small companies. Around 20 major Indonesian private
companies have assets totaling Rp 67.7 trillion or 53.2% of the total value of Rp
127.3 trillion assets of multi-finance companies. Federal International Finance
(FIF) and Astra Sedaya Finance (ASF) are the largest in assets respectively
valued at Rp 9 trillion and Rp 7.4 trillion. Both are subsidiaries of Astra Group
offering financing service for the purchases of motorcycles and cars produced by
the group -- ASF for Toyota, Daihatsu, Isuzu, BMW, Peugeot and Nissan Diesel
cars and FIF for Honda motorcycles.

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.

Indonesian Commercial Newsletter – March 2008 13


Industry Profile

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

Financing Value Rp 107.7 trillion

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.

14 Indonesian Commercial Newsletter – March 2008


Industry Profile

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

Consumer finance grabs largest market share of 62.8%


In 2007, consumer finance had a market share of 62.8% or Rp 67.6 trillion of the
total market of financing services. Financing service for the purchases of motor
vehicles contributed by far or more than 90% to the total value of consumer
finance. In 2007, car sales totaled 433,000 units in the country and motorcycle
sales totaled 4.6 million units. The rest was for the purchases of electronic
goods, etc.

Leasing business reported Rp 36.5 trillion in financing service or a market share


of 33.9%. Leasing business grew fast in the past three years to follow the revival
of the corporate sector in the mining, construction and manufacturing as well in
plantation sectors that need heavy equipment. Factoring and credit card
business had minor contribution to the total value of multi-finance business. See
the following table.

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

Multi-finance companies with income more than Rp 1 trillion


Around 13% or 27 of multi-finance companies reported income more than Rp 1
trillion each in 2007. The 27 companies posted a total income of Rp 83.9 trillion
or 77.9% of the total income of Rp 107.7 trillion reported by all multi-finance
companies that year.

Indonesian Commercial Newsletter – March 2008 15


Industry Profile

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.

Bussan Auto Finance chalked up an income of Rp 5.3 trillion. This company


offers financing service for the purchases of Yamaha motorcycles, which began
to gain larger share of the market threatening the domination of Honda.

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

16 Indonesian Commercial Newsletter – March 2008


Industry Profile

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

Companies leading in profit


Bapepam LK, released the number of 20 companies or 9.8% of multi-finance
companies reporting the largest profit in 2007 led by Central Java Power, Adira
Finance and FIF as shown in the following table.

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

Indonesian Commercial Newsletter – March 2008 17


Industry Profile

Companies reporting losses


Based on financial reports released by the Finance ministry, 17 or around 8.2%
of multi-finance companies reported losses in 2007 led by Wahana Ottomitra
Multiartha (WOM Finance) with loss totaling Rp 241 billion. In 2006, the company
still reported a profit of Rp 90.8 billion.

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.

18 Indonesian Commercial Newsletter – March 2008


Industry Profile

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

Distribution of financing services

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

The battle grounds of financing companies are in services, interest rates,


flexibility in credit terms, number of dealers, promotion with prizes.

Indonesian Commercial Newsletter – March 2008 19


Industry Profile

Facing the competition, financing companies adopt a number of strategies such


as :

- Improve services to clients


Multi-finance companies offer facility in payments of installments such as
payments through ATM, guaranteed security of certificate of ownership of motor
vehicles (BPKB), simpler procedure of securing motor vehicle license (STNK),
speedy service for clients or dealers.

- 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.

- Skip Installment Package


This facility is a new breakthrough never yet offered by ACC’s competitors . ACC
is the first to offer skip installment package that frees clients from the obligation
to pay monthly installment on certain occasions such as Idul Fitri, Christmas
and the start of new academic year.

- 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.

- Customer to customer financing


Astra Credit Company (ACC) expands its market by applying Customer to
Customer Financing, which is an ACC’s financing facility in buying used vehicles
on credit from individuals.

Preparation of documents is quick and simple, generally secured in 8 hours.


More than 80% of buyers of motor Astra’s vehicles yare facilitated with ACC’s
credits.

- Cooperation with dealers


By cooperating with dealers, multi-finance companies will be better guaranteed in
supply of motor vehicles.

20 Indonesian Commercial Newsletter – March 2008


Industry Profile

- Establishing networks with banks


In order to facilitate payment of installment by clients, multi-finance companies
have established cooperation with banks to allow clients to pay installment
through any ATM of banks included in the network. WOM will increase the
number of its dealers from 2,500 now to 3,000 later this year. It also will increase
the number of its branch offices now totaling 110.

Sources of Funds

Multi-finance companies generally have limited capital, therefore, they need


external financial support to meet demand for their services especially in
financing the purchases of cars and motorcycles.

In the period of 2003-2007, total financial support received by multi-finance


industry grew 20.3% annually on the average. In 2004, the industry received Rp
78.9 trillion in financial support or an increase of 64.8% from Rp 47.9 trillion in
the previous year. The amount grew further to Rp 88.7 trillion in 2005. The year
2004-2005 was a booming period for the industry especially with the growing
demand for the service in the motor vehicle market. However, the booming
years ended in 2006 marked with a decline of 15.4% in the amount of financial
support to Rp 75 trillion. In 2007, the amount resurged to Rp 89.7 trillion.

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

3. Bonds 4,003 8,861 11,410 10,087 12,928 27.3

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

5. Capital 4,900 10,660 11,816 --- --- 64.2


6. Other 9,700 12,696 13,390 --- --- 18.2
Total fund 47,853 78,876 88,731 75,090 89,672 20.3
Source : Bank Indonesia
Note: * until November

Indonesian Commercial Newsletter – March 2008 21


Industry Profile

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 financing companies (between Indonesian and foreign partners)


generally use loans from its foreign shareholders or affiliates. Joint venture
companies used foreign loans worth Rp 30.99 trillion in 2007 as against Rp 4.85
trillion used by non joint venture private companies.

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.

22 Indonesian Commercial Newsletter – March 2008


Industry Profile

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.

Currently a number of multi-finance companies have become a target of


acquisition by banks seeking to expand market to consumer credits prompted by
strong growth of the consumption sector in the country.

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.

Among banks which have succeeded in acquiring multi-finance companies and


expanding them are Bank Danamon, BII and BCA. Banks have been the main
partners of multi-finance companies in joint financing scheme.

BCA Finance uses of funds from its parent company Bank Central Asia (BCA)
and Bank Mandiri for 70% of funds for joint financing scheme.

Indomobil Finance received a loan of US$ 60 million from a syndicate of 12


foreign banks and 8 local banks in 2007.

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

Creditor/Partner Type of Date Credit Status Finance Financing Interest


financing Amount period shares rate/year
(Rp billion) (month) (%)
1. PT. WOM Finance
Bank Danamon Joint 2004 150 Non 60 Mandiri- 17,25
financing revolving 90%
WOM-
10%

Indonesian Commercial Newsletter – March 2008 23


Industry Profile

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.

In 2007, a there were a number of multi-finance companies issuing bonds


starting by PT BCA Finance with bonds valued at Rp 500 billion early 2007, PT
Summit Oto Finance with bonds valued at Rp 1 trillion, Tunas Finance with
bonds valued at Rp 500 billion and FIF valued at Rp 800 billion. All of the multi-
finance companies operate in consumer finance in the car and motorcycle
sectors. In April 2008, FIF plans to issue its 8th bonds valued at Rp 1 trillion in
four series – A series valued at Rp 300 billion maturing in 2009, B series Rp 150
billion maturing in 2010, and C series Rp300 billion maturing in 2011 and D
series Rp 250 billion maturing in 2012. See the following table.

Table - 17
Bonds issued by multi-finance companies
(Rp. Million)
Maturity Date

Name of Company 2007 2008 2009 2010 2011 Total


Adira Dinamika Multi
Finance - 468,500 570,000 90,000 90,000 1,218,500
Astra Sedaya Finance 669,000 725,000 320,000 100,000 - 1,814,000
BCA Finance - - 100,000 275,000 125,000 500,000

24 Indonesian Commercial Newsletter – March 2008


Industry Profile

Table – 17 cont’d (Rp. Million)


Maturity Date

Name of Company 2007 2008 2009 2010 2011 Total


Bhakti Finance 98,000 98,000
Clipan Finance
Indonesia 75,000 150,000 - - - 225,000
Federal International
Finance 325,000 675,000 375,000 300,000 350,000 2,025,000
Indomobil Finance
Indonesia 175,000 350,000 - - - 525,000
Oto Multiartha 300,000 200,000 - - - 500,000
Summit Oto Finance - 650,000 1,000,000 350,000 - 2,000,000
Serasi Autoraya 176,250 - - - 176,250
Tunas Financindo
Sarana 100,000 250,000 100,000 350,000 - 800,000
U Finance Indonesia 50,000 - - - - 50,000
WOM Finance 340,000 340,000 635,000 160,000 - 1,475,000
Total 2,132,000 3,984,750 3,100,000 1,625,000 565,000 11,406,750
Source: BES, ICN

Government Regulation and Policy

Basic regulations on multi-finance business


The government regulates the operation of multi-finance business in the country.
The first policy on multi-finance industry was issued in 1974. At that time there
was only one type of financing business that is leasing business. Later the
regulation was amended and revised.

The main government regulation on multi-finance business is a decision of the


finance minister No. 448/KMK.017/2000 in October 2000 and No.
178/LMK.06/2002 in April 2002. The two ministerial decisions regulates the
activities of multi-finance companies including procedure of establishment,
capital, capital, ownership and board of directors, the opening of branch offices,
loans and investments and limits of operations and other related aspects.

- Activities of multi-finance companies


Based on a decision of the finance minister No. 448/KMK.017/2000, the business
scope of multi-finance companies which is expanded into 4 types:
• Leasing
• Factoring
• Consumer finance including financing of motor vehicle, electronic goods and
housing credits
• Credit card
• Establishment of Financing Companies
Multi-finance companies could be established and owned by:
• Indonesia citizens and/or Indonesian companies
• Foreign companies and Indonesian citizens and /or joint venture
• The companies must be PT (limited liabilities) or cooperates

Indonesian Commercial Newsletter – March 2008 25


Industry Profile

Application for license to establish a financing company must be addressed to


the finance minister. Until now the decision of the finance minister No.
185/KMK.06/2002 per April 2002, on suspending issuing new license for
financing companies in Indonesia. But, since 2006 it is no longer effective.

- 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.

New regulation of the finance minister No. 84/2006


The regulation of the Finance Minister No. 84/2006 issued in September 2006,
constituted a new policy on capital and private placement.

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.

Conclusion and Prospects

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.

26 Indonesian Commercial Newsletter – March 2008


Industry Profile

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.

he association of motorcycle industry (AISI) said sales of motorcycles in 2007


totaled 4.6 million units or an increase of 5.4% from the previous year.
Meanwhile car sales rose to 433,000 units or an increase of 35.8% form the
previous 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
* * *

Indonesian Commercial Newsletter – March 2008 27


COMPANY PROFILE

ASTRA GROUP CONTROLS AUTOMOTIVE


CREDIT FINANCING BUSINESS

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).

The Astra Group teamed up with Standard Chartered Bank in a consortium to


acquire Bank Permata. Bank Permata is directed toward supporting financing of
credits for the purchases of automotive products, directly or through multi-finance
companies.

Federal International Finance


Federal International Finance (FIF) was established in 1989 with the name of
PT. Mitrapusaka Artha Finance. In 1991, the name was changed with PT.
Federal International Finance (FIF). After being increased several times, in 2006,
FIF now had a capital of Rp300 billion. PT. Astra International Tbk of the Astra
Group owns 99.9% of FIF and PT. Arya Kharisma owns 0.1%.

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.

28 Indonesian Commercial Newsletter – March 2008


Company Profile

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.

In 1996, FIF began to focus more on financing Honda motorcycle credits.


Currently FUF has 276 outlets and 109 marketing offices in more than 150 cities
in Indonesia. Now it has more than 2.6 million clients all over the country.

FIF has succeeded in expanding itself to become a market leader in motorcycle


credits. FIF has a 57% share of the motorcycle credit market.

FIF’s record performance was in 2005 when it financing credit reached Rp 14


trillion. In the following two years the value fell to Rp 10.2 trillion in 2007 as a
result of a decline in the sales of motorcycles in the country in 2006.

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 -

Indonesian Commercial Newsletter – March 2008 29


Company Profile

Table – 2 cont’d (000 units)


Year Cub Sports Used Electronic
motorcycles motorcycles motorcycles
2005 1,765 87 269 -
2006 2,089 92 382 -
2007 1,874 83 432 285
Source: FIF

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.

30 Indonesian Commercial Newsletter – March 2008


Company Profile

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 Credit Company (ACC)


Astra Credit Company offers credits only for the purchases of cars. ACC is a
trading name of holding company PT. Astra Sedaya Finance (ASF), which has
three subsidiaries -- Astra Auto Finance, Astra Multi Finance and Staco Mitra
Sedaya Finance. ACC is fully supported by PT. Astra International Tbk the
holding company for Astra Group and GE Capital.

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.

Products and services


In the beginning ACC offered credits only for the purchases of new and second
hand cars produced by the Astra group including Toyota, Daihatsu, Isuzu and
Nissan Diesel, but later it also provided credits for the purchases of non Astra
products such as Jaguar, Audi, Daewoo, Chevrolet, Ford, Honda, KIA, Land
Rover, Mitsubishi, Volvo, VW, etc.

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.

Indonesian Commercial Newsletter – March 2008 31


Company Profile

Products and service offered by ACC include:


• Insurance for vehicles
• Protection against accidents
• ACC Credit Protection
• ACC Family Protection Plus
• ACC Health Protection Plus
• ACC Bill Protection Plus
• ACC Gold MasterCard
• Securing STNK and BBN

ACC Card is issued by ACC in cooperation with PT GE Finance Indonesia.


ACC Card holders are exempted from membership fee in the first year.
Installment is changed with low interest of 0.999%, and can draw cash up with a
.12% interest rate, free airport lounge for two persons, price discount in certain
stores.

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.

Financing Credit for Automotive Products


In the first four months of 2007, the number of vehicles purchased with credit
from ACC totaled 28,237 units including 14,442 units of brand new cars and
13,795 units of second hands cars. Currently, ACC controls 65% of the car credit
market in the country.

32 Indonesian Commercial Newsletter – March 2008


Company Profile

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.

In 2008, the financing target is set at Rp 12.5 trillion or an increase of 25%. In


order to reach the target ASF is seeking loan of US$ 100 million from foreign
bank syndicate. It hopes to secure and receive the loan in June 2008. A number
of banks already pledges loans such as Hong Kong and Shanghai Banking
Corporation (HSBC), Standard Chartered, and Bank of Tokyo-Mitsubishi UFJ
(BTMU).

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.

Indonesian Commercial Newsletter – March 2008 33


Company Profile

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

Toyota Astra Financial Service

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%. * * *

34 Indonesian Commercial Newsletter – March 2008


AUTOMOTIVE FINANCE

MULTIFINANCE INDUSTRY MAJOR DRIVER OF


CAR SALES IN INDONESIA

Surge in car sales early 2008

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.

General description of car industry

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.

The change in policy was necessitated by the prevailing condition of market in


the world including in this region, with principals building production centers in
various countries depending on the market potentials.

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.

35 Indonesian Commercial Newsletter – March 2008


Automotive Finance

Table – 1
Auto production, 2003 – 2007

Types Production (units)


2003 2004 2005 2006 2007
Cars 322,044 422,099 500,710 296,008 411.638
Source: Gaikindo
Note: *) estimated total car production based on data until September 2007

Car sales reach 433,000 units


Based on official record of the association of motor vehicle industries (Gaikindo),
car sales in the past five years peaked at 533,000 units in 2005, but in 2006
sales plunged 40.3% to 318,000 units as a result of a sharp rise in oil fuel prices
late 2005. In 2007, sales began to scale up again to reach 433,000 units. See
the following table.
Table - 2
Car sales, 2003 – 2007

Types Sales (units)


2003 2004 2005 2006 2007
Cars 354,629 483,148 533,917 318,904 433,341
Source: Gaikindo
Note : Sales include cars imported in CBU form

Main Producers of Cars


Car industry in the country is dominated by brand holding sole agents (ATPM)
grouped in the Astra Group -- PT. Toyota Astra Motor, PT. Astra Daihatsu Motor,
PT. Astra Nissan Diesel. Total production of the three companies averages
281,500 units per year. Their brands are Toyota, Daihatsu, Isuzu and Nissan
Diesel (truck).

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

36 Indonesian Commercial Newsletter – March 2008


Automotive Finance

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 companies dominate system of car purchases

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.

Multifinance help in prompting cars sales by offering attractive financing services


such as low interest rates and longer payment terms as well as simple
procedure and easier requirements.

Table – 4
Systems of buying motor vehicles, 2007

Types Financed with credits Cash


Cars 80% - 90% 10% - 20%
Source: Multifinance Companies Report

Indonesian Commercial Newsletter – March 2008 37


Automotive Finance

Groups of ATPM control car purchase financing


More ATPMP begin to control multifinance companies to help facilitate their
sales. Some multifinance companies, therefore, offer credits only for the
purchases of certain brands of cars.

Among the multifinance companies controlled by ATPMs are Astra Sedaya


Finance by the Astra Group with brands of Toyota, Daihatsu, Isuzu, Nissan
Diesel, Peugeot and BMW; Indomobil Finance by Indomobil Group with brands
of Suzuki, Nissan, Volvo Ssangyong, Hino, Renault and Cherry, and Tiga
Berlian Autofinance by PT Kramayudha Tiga Berlian with brand of Mitsubishi,
etc.
Table - 5
Multifinance companies and brands of cars
Mutifinance companies Brands
Astra Sedaya Finance Toyota, Daihatsu, Isuzu, Nissan Diesel,
Peugeot, BMW
Toyota Astra Finance Toyota
Indomobil Finance Suzuki, Nissan, Volvo, Ssangyong, Hino,
Renault, Cherry
Dipo Finance Mitsubishi
Tiga Berlian Auto Finance Mitsubishi
Tunas Ridean Motor Toyota
Suzuki Finance Suzuki
Source: Data Consult

Main players financing auto purchases


Astra Sedaya Finance is the largest company offering financing service for the
purhases of cars in Indonesia. In 2007, it has outstanding credit of Rp 6,225
billion or 17.6% of the total outstanding credits for car financing service.

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%

38 Indonesian Commercial Newsletter – March 2008


Automotive Finance

Table – 6 cont’d (Rp billion)


Outstanding Share
No. Companies Credit (%)
5 BFI Finance Indonesia 1,875 5.3%
6 Indomobil Finance Indonesia 1,841 5.2%
7 U Finance 1,364 3.9%
8 BCA Finance 1,347 3.8%
9 GE Financing 1,232 3.5%
10 Mitsui Leasing Capital Indonesia 1,222 3.5%
11 Dipo Star Finance 848 2.4%
12 Trihamas Finance 826 2.3%
13 Tiga Berlian Auto Finance 604 1.7%
14 Astra Auto Finance 562 1.6%
15 ITC Auto MF 507 1.4%
Subtotal 27,665 78.4%
Others 7,637 21.6%
Source: Data Consult

Factors to select financing companies

There are a number of factors prompting consumers to select financing


companies in buying cars. Among the factors are interest rate, duration of
repayment, and the amount of advance payment offered by the companies.
Multifinance companies compete in offering attractive interest rate and payment
terms.

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%.

Duration of loan repayment


Multi-finance companies are competing in offeirng longer time for loan
installments to 3-5 years from previously not longer than 2 years. Astra Sedaya
Finance offers a repayment term of 1 - 4 years; Oto Multiartha 3 years.

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.

Indonesian Commercial Newsletter – March 2008 39


Automotive Finance

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

Profiles of main multifinance companies

Astra Sedaya Finance (ASF)


Astra Sedaya Finance was established in 1982 under the name of PT Rahardja
Sedaya. Later the company's name was changed into PT Rahardja Sedaya
Finance. With the acquisition of part of the company's shares by General Electric
Asia Capital Investment, in 1992 the company's name was again changed into
PT Astra Sedaya Finance.

The company's current shareholders are PT General Electric Services ( 47%),


PT Astra International Tbk ( 44.28%), and PT Sedaya Multi Investama (8.72%).
PT Astra International Tbk is the holding company of Astra Group, the country’s
largest automotove company. This group has also business in manufacturing,
plantations, heavy equipment industry and trading.

40 Indonesian Commercial Newsletter – March 2008


Automotive Finance

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.

The company obtained a license to operate as a multifinance company from the


ministry of finance with scope of activities: leasing, factoring, credit card issuing
and consumer finance. However, currently the company focuses its commercial
operations on financing the purchase motorcycle and leasing. It provide
financing servcie for multi brands of cars, both for new and used ones. Oto
Multiartha is affiliated with PT Summit Oto Finance, a finance company
specializing in financing the purchases of motorcycles. Both companies are partly
owned by Sumitomo Corporations.

PT Oto Multiartha has already taken in place several strategies in response to


the growing demand on auto financing. The company have managed cooperation
with more than 3,000 authorized dealers, leading car producers, insurance

Indonesian Commercial Newsletter – March 2008 41


Automotive Finance

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.

Tunas Financindo Sarana Corporation (TFSC)


The company was established in 1982 under the name of PT Tunas Financindo
Corporation. The company is a subsidiary of PT Tunas Ridean Tbk, a major car
dealer in Indonesia. In 2000, the company's name was changed into PT Tunas
Financindo Sarana. The company is listed on the Indonesian Stock Exchange.
Tunas Ridean is a major authorized dealer of PT Astra International Tbk. This
company has 7 subsidiaries operating as dealers, car leasing and one finance
company.

PT TFSF has a license to operate in leasing, factoring, and consumer finance.


However, up to now the company only focuses on consumer finance and leasing.
Initially the company focused its activities on financing car sales of its parent
company, Tunas Ridean, but later, the company also expanded its activities by
financing of car and motorcycle sales of other automotive dealers. At present,
financing of the purchases of cars outside its own group has covered 70% of its
total financing. The company finances both new and used cars. The company
has business relationship with around 575 dealers in Jakarta and 1,920 dealers
outside Jakarta.

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

42 Indonesian Commercial Newsletter – March 2008


Automotive 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

The role of multifinance companies is getting more important in boosting car


sales in the country. More than 80% of car sales are facilitated with the help of
financing agencies either banks or mltifinance companies. This shows the
prospects remain encouraging for multifinance industry in Indonesia.

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 development of a multi-finance company depends much on the


performance of ATPM with which it is affiliated, and interest rate, advance
payments and duration of credits it offers. Therefore, multifinance companies
have to consider the purchasing power of the people is setting heir terms.

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.

* * *

Indonesian Commercial Newsletter – March 2008 43


Automotive Finance

MULTIFINANCE COMPANIES CREATE SYNERGY WITH


MOTORCYCLE PRODUCERS

Backgrounds

The increase in the sales of motorcycles is partly thanks to the role of


multifinance industry. The 5.97% increase in the sales in 2007 indicated that
demand remained strong for motorcycles despite a setback in sales in 2006 as a
result of a sharp increase in the price of oil fuels (BBM) toward the end of 2005.

In fact an increase in the BBM prices may contribute to increase in sales of


motorcycles necessitating greater role of multifinance industry. Many people
would choose to use motorcycles as means of transport for efficiency as cars
would need much higher cost of fuels.

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.

General description of motorcycle industry

Motorcycle industry in Indonesia has continued to expand in the past several


years as indicated by the increase in production and sales of motorcycle sales
despite a setback in 2006.

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.

Production tends to increase

The country’s production of motorcycles totaled 3,897,250 units in 2004, up


38.5% from 2,814,054 units in the previous year. Production of motorcycles
peaked at 5,113,487 units in 2005.

44 Indonesian Commercial Newsletter – March 2008


Automotive Finance

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

Sales in 2004 totaled 4,119,770 units or an increase of 33.20% from 3,092,773


units in 2003. In 2005, sales peaked at 5,522,026 units, or an increase of
34.04% from the previous year. In 2006 sales fell to 4,468,380 units before rising
again to 4,669,988 units in 2007.

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

Indonesian Commercial Newsletter – March 2008 45


Automotive Finance

The largest producers of motorcycles

PT Astra Honda Motor still is the largest producer of motorcycles in Indonesia,


with production capacity of 3 million units per year, followed by PT Yamaha
Indonesia Motor Manufacturing with a production capacity of 2.4 million units
per year, and PT Indomobil Suzuki International with an annual production
capacity of 1.5 million units.

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

Financing by multifinance companies increasing

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.

Assuming that multifinance companies finance 80% of the purchases of


motorcycles and provide credits 75% of the value of motorcycles purchased in
2004-2007, the market size for financing services would be 80%x75%x the sales
value of motorcycles.

In 2004, credits provided by multifinance companies for the purchases of


motorcycle totaled Rp 27.192 trillion trillion. The amount rose to Rp 39.758
trillion in the following year.

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.

46 Indonesian Commercial Newsletter – March 2008


Automotive Finance

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

Main players in financing business

Federal International Finance (FIF) is a multifinance company with the largest


outstanding credits Rp 7,793 billion in 2007. The company is a subsidiary of the
Astra Group. It offers financing service only for the purchases of Honda
motorcycles which are produced by its sister company in the same company
group. FIF leads over other financing companies in the motorcycle market with a
share of 21.40% of the coubtry’s total motorcycle sales in 2007.

The second largest is Bussan Auto Finance with an outstanding credit of Rp


5,306 billion in 2007. This company offers financing service for the purchases of
Yamaha motorcycles. Wahana Otto Multiartha (WOM) is the third with
outstanding credit of Rp 4,355 billion in 2007 offering financing service only for
the purchases of Honda motorcycles.

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

Indonesian Commercial Newsletter – March 2008 47


Automotive Finance

Main factors to select multifinance companies in motorcycle market

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

Cooperation between ATPM and Multifinance companies creates synergy

Brand holder sole agents (ATPM) of motorcycles and multifinance companies


create mutually beneficial cooperation in the motorcycle market. ATPMs gain
from an increase in sales with the involvement of multifinance companies and on
the other hand multifinance companies gain from the market opened by ATPMs.
Both serve to facilitate each other operations.

The potential role of multifinance companies has prompted some ATPMs to


establish subsidiaries to operate as the financing agency to help boost their sales
of motorcycles.

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.

48 Indonesian Commercial Newsletter – March 2008


Automotive Finance

Bussan Auto Finance cooperates with Yamaha Indonesia Motor Manufacturing to


finance the purchases of Yamaha motorcycles in Indonesia.

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

Companies Main brands ATPM/Producer

Federal International Honda Astra Honda Motor


Finance (AHM)
Bussan Auto Finance Yamaha Yamaha Indonesia
Motor manufacturing
(YIMM)
Wahana Otto Finance Honda, Yamaha, Suzuki AHM, YIMM,ISI
Source: Data Consult
Note: ISI-Indomobil Suzuki International

Marketing Strategy

Many strategies have been used by multifinance companies to attract clients


such as by improving services, cutting interest rates, offering flexible credit terms
and promotion with prize, payment systems such payment through ATM. etc.

Expansion of distribution networks by opening more branches in smaller towns to


come closer to consumers would also contribute to increasing the number of
clients especially among the middle to low income people, which make up most
of the users of motorcycles in the country.

ACC has adopted a breakthrough in marketing strategy through what is called


skip installment package, progressive installments and balloon installment.

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.

Progressive installment is a product offering lower early monthly installment than


normal level of monthly installment and degressive installment offering gradual
cut of installment every six months anticipating risk of default toward the end of
payment period.

Indonesian Commercial Newsletter – March 2008 49


Automotive Finance

Balloon payment is a product offering lower early monthly installment compared


to normal with the remaining debt to be repaid at the end of the last monthly
installment.

Profiles of multifinance companies

Federal International Finance (FIF)


PT Federal International Finance (FIF) is a subsidiary of PT Astra International
Tbk, and part of the Astra Financial Services Group, one of the largest groups of
financing firms in Indonesia. Founded in 1989, under the name of PT Mitra
Pusaka Artha Finance, FIF originally operated in various financial service
business areas including consumer finance, leasing, and factoring, Since 1996,
the company gradually shifted its focus to financing the purchases of Honda
motorcycles .

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.

Bussan Auto Finance (BAF)


PT, Bussan Auto Finance (BAF) started commercial operation in September
1997, under the name of PT Danamon Mitsui Otomotif Finance (DMF). The main
shareholders of PT DMF were PT Danamon Sanggrahan and Mitsui & Co, Ltd.

In August 1998, PT Danamon Sanggrahan withdrew from DMF, and the


company's name was changed into PT Bussan Auto Finance (BAF).

PT BAF is a major financing company to support the marketing of Yamaha


motorcycles in Indonesia. It provides financing service only for the purchases of
Yamaha the second largest brand in Indonesia, The company has a close
relationship with PT. Yamaha Indonesia Motor Manufacturing (YIMM), the
producer of Yamaha in Indonesia.

50 Indonesian Commercial Newsletter – March 2008


Automotive Finance

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.

Wahana Ottomitra Multiartha (WOM)


Established in 1982, the company was formerly named PT Jakarta Tokyo
Leasing and owned by PT Kawaguchi Indonesia and PT Alam Raya Sewing
Machines, The company's articles of associations have been amended several
times. The name was changed from PT Jakarta Tokyo Leasing into PT Fuji
Semeru Leasing and in 1997 with PT Wahana Ometraco Multi Artha.

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.

WOM is one of leading multifinance companies in Indonesia, focusing on


financing the purchases of motorcycles. WOM currently has 101 branches and
sub-branches supporting over 3,000 dealers of motorcycles throughout Java and
North Sumatra and has expanded distribution network to South Sumatra,
Kalimantan and Sulawesi.

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.

In terms of units sales contract, the number of motorcycles covered by its


financing service rose 11% from 362,758 units in 2005 to 400,946 units in 2006.
WOM Finance, therefore succeeded in maintaining its 10% market share in the
financing industry during that year of slump in the country.

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%.

Summit Oto Finance (SOF)


Summit Oto Finance is relatively a new company, established in 2003 by two
main shareholders -- Sumitomo Corporations and PT Oto Multiarha, This
company constitutes an expansion of Oto Multiartha and Sumitomo Corp
operations in automotive financing service business.

Indonesian Commercial Newsletter – March 2008 51


Automotive Finance

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.

Adira Dinamika Multi Finance (Adira)


PT Adira Dinamika Multi Finance Tbk (Adira) was established in 1990 as an
independent finance company focusing on car purchase financing. However,
starting in late 90's following the financial crisis, the company shifted its focus to
motorcycle purchase financing.

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.

Its market share in motorcycle sector as of 30 September 2007 expanded to


14% from 11.8% a year before, but fell in the car sector from 4.3% to 2.6%.

52 Indonesian Commercial Newsletter – March 2008


Automotive Finance

Adira cooperates with PT Artajasa Pembayaran Elektronis which serves as the


provider for the on-line electronic payment. In 2004, the company also signed a
similar agreements with PT Bank Central Asia Tbk as the collecting agency for
installments from the clients.

Conclusion

The prospects of business financing the purchases of motorcycles are still


encouraging as motorcycles have become vital means of transport for most of
middle to low income people, who make up the majority of the country’s
population.

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.

Meanwhile, multifinance companies seek to attract more clients by offering more


attractive credit terms such as with smaller advance payment, longer repayment
period, and lower interest rate.

Multifinance companies still have wide market opportunity with expected


increase in the number of people needing motorcycles.

* * *

Indonesian Commercial Newsletter – March 2008 53


CONSUMER FINANCE

GROWING CONSUMPTION AND MONETARY STABILITY


BOOST GROWTH OF CONSUMER FINANCE INDUSTRY
IN ELECTRONIC SECTOR

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 community consumption of tertiary goods such as motorcycles and


electronic goods grew fast because of a number of factors including tight
competition in the market and interest rate cut and improved purchasing power of
the people, not to mention expansion of sales networks of the products.

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 situation is utilized by consumer finance service industry to offer credits to


finance the purchase of electronic products. A number of players in this industry
are aggressive in promoting their services in cooperation with hypermarkets by
launching the program of interest free credits for certain period.

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.

Consumer finance service offering to finance the purchase of electronic products


has expanded significantly in the past several years. In 2006, consumer finance
service grew 26% in value to Rp 5.7 trillion and in 2007 it grew further by 18% to
Rp 6.7 trillion.

Value of consumer finance service for the purchases of electronic goods


growing

The value of financing the purchases of electronic goods has increased


significantly over the past several years. In 2005, the financing was valued at Rp
4.5 trillion, up 26% to Rp 5.7 trillion in 2006. The increase, despite the general
slump following the oil fuel price hikes in Oct. 2005, indicated that the financing
business would continue to grow amid falling purchasing power of the people.

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.

54 Indonesian Commercial Newsletter – March 2008


Consumer Finance

In 2007, the value of financing the purchases of electronic products grew further
18% to Rp 6.7 trillion.

The increase was driven by expansion by players in the financing industry in


offering credits. Credit expansion is made by widening access to financing
especially the purchases of electronic goods in modern retails such as
hypermarket and specialty stores and sales centers such as Glodok in Jakarta.

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

Largest provider of consumer finance service

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.

Indonesian Commercial Newsletter – March 2008 55


Consumer Finance

Sunprima was established by Columbia in 2003. Now Columbia has 600 outlets
in 400 cities in Indonesia.

Other companies establish cooperation with hypermarkets such as Sumber


Kredit which cooperates with Carrefour, Electronic City and Makro; Bhakti
Finance cooperates with Agis. Sumber Kredit also is aggressive in expanding
cooperation with electronic stores in large 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

PT. Federal International Finance (FIF)

PT Federal International Finance (FIF) was established with the name of PT


Mitrapusaka Artha Finance in May 1989. In 1991, its name was changed with PT
Federal International Finance.

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.

In 2006, FIF reported net profit at Rp 341 billion, up to an estimated Rp 410


billion in 2007. The profit came mainly from its operation in motor cycle purchase
financing. Profit from the electronic gods sector was around 10% of its net profit
or Rp 34 billion in 2006 and Rp 41 billion in 2007.

56 Indonesian Commercial Newsletter – March 2008


Consumer Finance

PT. Sunprima Nusantara (Sunprima)


Sunprima was established in 2003 to support its business in electronic retail
operated by Columbia. Columbia was originally a distributor of household
electronic products imported from Europe and Japan. It started business in
financing service only in 1982.

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.

PT Adira Quantum Multifinance (Adira)


Adira was established in 2006 to provide financing service for electronic
products.

Previously, or 2004, the business was operated by PT. Adira Dinamika


Multifinance, which has core business in financing the purchases of car and
motorcycle.

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.

GE Finance Indonesia (Sumber Kredit)


Sumber Kredit is an electronic financing service product of GE, which started
operation in 1992. GE is aggressive in its operation in consumer finance
business in the electronic sector.

Currently Sumber Kredit has 300,000 clients. The company cooperates with
Carrefour hypermarket.

PT. Finansia Multi Finance (FMF)


PT. Finansia Multi Finance was established in June, 1994 holding the license to
operate as a factoring, leasing, consumer finance and credit card company Its
product of consumer finance is known with the brand of Kredit Plus.

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 shareholders of FMF include Finansia Pacifica Raya (67%), ND Investment


Pte.Ltd (24.9%) and Growmoto Kendall Pte.Ltd (8.10%).

Indonesian Commercial Newsletter – March 2008 57


Consumer Finance

Development of modern retail plays major role

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.

Shoppers now choose to go to hypermarket rather than to supermarket for


shopping as hypermarket offer greater guarantee in the availability of goods. The
number of supermarket outlets of Matahari for example has declined sharply
from 65 in 2004 to 32 at present. Part of them has been converted into
hypermarket outlets and other was closed down.

Table - 3
Number of hypermarket outlets in Indonesia
Year Number Growth
(%)
2005 83 -
2006 90 4.4
2007 94 8.4
Source: Data Consult

Electronic Industry Growing

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.

58 Indonesian Commercial Newsletter – March 2008


Consumer Finance

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 2007, sales of TV, refrigerators, washing machines and AC resurged to 3.6


million units; 1.9 million units; 937,000 units and 850,000 units respectively.

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 (%) (%)

2005 2,443,512 - 1,186,821 - 446,818 - 571,807 -


2006 2,194,370 -10 1,030,590 -13 435,052 -2,6 437,899 -23
2007 3,663,900 67 1,940,000 88 937,000 115 850,000 94
Source: EMC - Data Consult
Note: Not including computers, water pumps, handphones, etc,

Prospects encouraging outside Java

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.

Indonesian Commercial Newsletter – March 2008 59


Consumer Finance

The share of Java is expected to remain dominant but the domination is


predicted to decline in favor of regions outside Java in the coming years as the
market in Java especially in Jakarta will some time be saturated while the market
is growing in the outer regions. In fact the share of Java already declined from
75% in 2002.

Expansion of business in consumer finance out side Java is focused mainly in


the motorcycle sector, but electronic sector is also potential. Among the financing
firms expanding operation outside Java is PT. Wahana Ottomitra Multiartha
(WOM) Finance Tbk. which has branch in Sulawesi operating in financing he
purchases of motorcycles.
Table - 5
Islands/areas and share of
Consumer finance credits, 2007
Islands/areas % of total credits
Java 68
Sumatra 19.8
Kalimantan 4.24
Sulawesi 4.28
Bali and Nusa Tenggara 3.6
Other areas 0.08
Total 100
Source: Data Consult

Players cooperating with modern retailers

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.

Players succeeding establishing cooperation with large retailers such as


hypermarkets and electronic specialty stores gain in the competition especially
the general consumers already have the perception that modern retailers offer
cheaper prices and that availability of goods is better guaranteed.

A modern retailer such as Carrefour is also superior financially allowing them to


provide subsidy for its underperforming units. In addition, only financially powerful
retailers can afford to pay expensive advertisements to attract shoppers.

According to data at the Electronic Market Center (EMC), modern retailers


account for 80% of the sales of electronic products in the Greater Jakarta
(Jabodetabek) area. Dealers of electronic products, therefore, are willing to cut
their profit margin from 6%-8% to 3%-4% for electronic products they sell in
modern retailer outlet. * * *

60 Indonesian Commercial Newsletter – March 2008


LEASING

LEASING DOMINATES FINANCING


OF HEAVY EQUIPMENT

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.

The expansion of the leasing industry is reflected by the continued increase in


the value of leasing from year to year, in 2007, the value of heavy equipment
leasing already reached Rp 22 trillion.

Leasing industry is dominated by several companies mainly joint venture


companies. The shares of some of the companies are owned by heavy
equipment vendors or distributors and company groups.

Value of heavy equipment leasing growing

The value of heavy equipment leasing continued to increase in the period of


2005-2007 -- from Rp 16.5 trillion in 2005 to Rp 22 trillion in 2007.

The increase in the value of heavy equipment leasing is attributable to expansion


of the mining and plantation sectors especially in Sumatra, Kalimantan, and
Sulawesi as well as the brisk development of property and infrastructure.

The increase in the value of heavy equipment leasing indicates an increase in


the leasing of heavy equipment as purchases of heavy equipment are mostly
financed with leasing as heavy equipment is expensive.

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.

61 Indonesian Commercial Newsletter – March 2008


Leasing

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

Year Value SGU heavy Growth


equipment (%)
(Rp. billion)
2005 16,586 -
2006 18,747 13
2007 22,088 17.8
Source: Data Consult

Joint venture companies dominate heavy equipment leasing business

Joint venture companies still dominate business in heavy equipment leasing in


Indonesia. Joint venture companies are superior financially and experience as
the co-owners of joint venture companies are dealers or manufacturers of heavy
equipment.

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.

62 Indonesian Commercial Newsletter – March 2008


Leasing

Table - 2
Largest heavy equipment
leasing companies

Value Value Growth


leasing 2006 leasing (%)
Companies Status
(Rp. Billion) 2007
(Rp. billion)
Dipo Star Finance
Joint venture 1,860 2,122 14.09
(Dipo Star)
Orix Indonesia
Joint venture 2,106 2,069 -1.76
Finance (Orix)
Indonesian
Chandra Sakti Utama
private 813 1,416 74.17
Leasing (CSUL)
company
Caterpillar Finance
Indonesia Joint venture 1,846 1,396 -24.38

BNP Lippo Utama


Joint venture 766 1,038 35.51
Leasing Corp (BNP Lippo)
ABN Amro Joint venture 618 1,017 64.56
State
Pann Multi Finance (Pann) 736 874 18.75
companies
UFJ BRI Finance
Joint venture 726 785 8.13
(UFJ BRI)
Buana Finance (Buana) Joint venture 662 813 22.81
Surya Artha Nusantara
Joint venture 285 866 203.86
Finance (SANF)
Total 10,418 12,396 18.99
Source: Data Consult/ICN

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.

Indonesian Commercial Newsletter – March 2008 63


Leasing

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.

Now it is 85% owned by Orix Corporation and 15% by Yayasan Kesejahteraan


Karyawan (Workers Welfare Foundation) of Bank Indonesia (YKKBI).
The leasing services of Orix include optional right (finance lease) and non
optional right (operating lease). Now Orix has branches in Medan, Palembang,
Jakarta, Bandung, Samarinda, Semarang, Solo, and Surabaya. Finance lease
dominates its leasing financing services.

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.

PT. Chandra Sakti Utama Leasing (CSUL)


CSUL is a subsidiary of PT. Trakindo, which is an official dealer of the machines
of Caterpillar heavy equipment. CSUL has branches in Medan and Surabaya
other than 50 branches of Caterpillar. CSUL provides special financing service
for the purchases Caterpillar units.

PT. Caterpillar Finance Indonesia


Caterpillar Finance Indonesia was established in 2000, providing financing
service for the purchase of new or second hand Caterpillar products and
equipment.

Plantation and Mining Sectors Growing

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.

The production is expected to continue to scale up in the coming several years.

64 Indonesian Commercial Newsletter – March 2008


Leasing

Table - 3
Indonesia’s coal production

Year Production Growth


(000 tons) (%)

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.

In 2007, the country’s rubber plantations reached 3.36 million hectares or an


expansion of 1.6% from 3.3 million hectares in 2006.

In 2008, rubber plantations are predicted to expand to further to 3.41 million


hectares.

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.

In 2008, the acreage is expected expand further to 6.77 million hectares.


Expansion is expected in Papua, Kalimantan, and Sulawesi.

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.

Indonesian Commercial Newsletter – March 2008 65


Leasing

Table - 4
Rubber and oil palm plantations
and production

Rubber Oil palm


Year Width of Growth Prod. Growth Width of Growth Prod. Growth
plantation (%) (000 tons) (%) plantation (%) (000 tons) (%)
(000 Ha) (000 Ha)
2004 3,262 - 2,066 - 5,285 - 10,830 -
2005 3,279 0.5 2,271 9.9 5,454 3.2 11,862 9.5
2006* 3,309 0.9 2,367 4.2 6,075 11.4 13,392 12.9
2007** 3,362 1.6 2,453 3.6 6,425 5.8 14,152 5.7
2008** 3,416 1.6 2,538 3.5 6,775 5.4 15,121 6.8
Average growth 1.15 2,339 5.3 - 6.45 13,071 8.7
Note: Ha = hectares
*) provisional
**) estimate with the model of double exponential smoothing
Source: Plantation Directorate General

Bonds alternative source of fund

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.

Opening branches near plantations and mining areas.

The expansion of plantation and mining sectors outside Java opens potential
market for heavy equipment leasing industry. A number of leasing companies

66 Indonesian Commercial Newsletter – March 2008


Leasing

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.

SANF has 9 branches including 3; in Sumatra, 2 in Java and 4 in Kalimantan,


also located 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

Players affiliated with producers/distributors of heavy equipment

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.

The parent companies of the shareholders generally operate in related business


areas and they are major users of heavy equipment such as heavy equipment
leasing, fabrication and contracting companies, plantation and mining companies
and mining service contractors.

CSUL is 99.9% owned by Trakindo which is a dealer of Caterpillar heavy


equipment. Trakindo is also affiliated with heavy equipment lessors -- PT. Cipta
Kridatama, and the manufacturer of spare parts and components of heavy
equipment -- PT. Sanggar Sarana Baja.

Indonesian Commercial Newsletter – March 2008 67


Leasing

Caterpillar Finance Indonesia is 85% owned by Caterpillar Financial Service


Corp, is a subsidiary of Caterpillar, Inc which is the producer of Caterpillar heavy
equipment. The remaining 15% is owned by PT. Natra Raya, which is also a
subsidiary of Caterpillar, Inc.

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.

PT SAN Finance (SANF) is 60% owned by Sedaya Multi Investama, which is a


subsidiary of PT. Astra International. PT. Astra International also has subsidiaries
operated in business related to heavy equipment such as heavy equipment
dealer United Tractor; plantation company Astra Agri; mining service contractor
Pamapersada Nusantara; and mining company Dasa Eka Jasatama.

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)

68 Indonesian Commercial Newsletter – March 2008


Leasing

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 %

Orix Corp: 85% Orix Corp - Financial (Leasing) -

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

* * *

Indonesian Commercial Newsletter – March 2008 69


FACTORING

FACTORING INDUSTRY IN INDONESIA


REMAINS IN THE DOLDRUMS

Factoring business has remained lagging behind other types of financing


business in the country. In 2006, there were 50 companies offering factoring
service or 25% of the total number of financing companies.

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%.

Value of factoring service growing

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

Year Value Growth


(Rp billion) (%)

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%.

70 Indonesian Commercial Newsletter – March 2008


Factoring

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

Jakarta has the largest share

Factoring business has grown only in economic or business centers such as


Jakarta. The industry could not yet make significant expansion to the regions.

Development of factoring industry is determined by the business condition in


certain areas as its market targets are mainly companies. In 2006, the industry

Indonesian Commercial Newsletter – March 2008 71


Factoring

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

Regions 2005 2006 Share Share


(Rp billion) (Rp billion) (%) (%)
Jakarta 579.75 488.44 53.36 43.48
West Java 332.01 274.58 30.56 24.44
Banten 0 218.30 0 19.43
Kalimantan 51.49 46.87 4.74 4.17
Sumatra 73.34 38.77 6.75 3.45
Central Java 17.29 22.38 1.59 1.99
East Java 11.41 14.17 1.05 1.26
Other regions 21.23 19.48 1.95 1.73
Outside Indonesia 0 0.50 0 0.04
Total 1.086.52 1.123.49 100 100
Source: Data Consult

Manufacturing Industry largest recipient

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

72 Indonesian Commercial Newsletter – March 2008


Factoring

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

NPL high for factoring credits

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.

NPL in factoring industry totaled Rp 257.4 billion or 11.77% as against 3.7% or


Rp 52.3 billion in credit card business, 2.29% or Rp 835.8 billion in leasing
industry.

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

Year Value Growth


(Rp. billion) (%)
2005 261.7 -
2006 253.5 -3.1
2007 257.4 1.5
Source: Data Consult

* * *

Indonesian Commercial Newsletter – March 2008 73


CORPORATE NEWS IN BRIEF

SMART TO ACQUIRE SANEX. PT Smart Luck International Ltd (Smart) plans to


acquire the 179,388,000 shares of PT Sanex Qianjiang Motor International Tbk
(Sanex). Smart also plans to buy 1,812,000 shares of Sanex held by Kong Tju
Yun, Sanex President Benny Suwandi said in a report to the Indonesian Stock
Exchange (BEI) in Jakarta. Benny said if the negotiations on the plans ended
with an agreement, Smart will owns 226,975,700 shares or 75.38% of Sanex.
Based on a decision of the capital market and financial agency watchdog
Bapepam No Kep-05/PM/2002 on 3 April 2002 on take over of public companies,
Smart has to make tender offer for all shares held by investing public. The
transaction will be held outside the stock exchange, but the procedure has yet to
be discussed, Benny said. In addition, the name of Sanex has been changed
with PT Allbond Makmur Usaha Tbk. and the name was officially used in the BEI
on February 26, 2008.

BANK MANDIRI’S REVITALIZATION CREDIT FOR PTPN X. Bank Mandiri,


the country’s largest lender, said it will provide Rp 1 trillion (US$ 111 million) to
revitalize state-owned sugar plantations this year. Agreement has been signed
on investment credit of Rp240 billion with four sugar factories in East Java owned
by PTPN X, PTPN VII and PTPN II, a bank senior vice president Sunarso said.
The loan fund will be used to expand the processing capacity of PG Gempolkrep
factory from 6,500 tons to 8,000 tons of sugarcane per day, the processing
capacity of PG Watutulis from 2,250 tons to 3,000 tons, PG Ngadirejo from
5,300 tons to 7,000 tons and PG Pesantren Baru from 5,000 tons to 7,000 tons
per day. Sunarso said agreement has also been signed on working capital credit
of Rp 200 billion for the companies. Earlier the state bank disbursed Rp 100
billion in credit for sugar farmers in Java. He said in 2007, the bank provided Rp
638 billion in credit for sugar plantation sector and Rp 38.5 billion for sugar
farmers.

ELNUSA SET TO CHALK UP NET PROFIT AT US$ 22 MLN THIS YEAR.


Publicly listed service company in oil and gas industry PT Elnusa said it is set to
chalk up a 81% increase in net profit to Rp 200 billion (US$ 22 million) this year
from Rp 110 billion last year. Corporate Secretary Heru Samodra said the only
listed subsidiary of state-owned oil and gas company Pertamina is forecast to
post Rp 2.19 trillion in operating income this year up from Rp 2.11 trillion in 2007.
The company management is optimistic that the company will post higher annual
profit in the next five years, Heru said. The company predicted a 49%% increase
in net profit to Rp 296 billion next year and to Rp 554 billion in 2012. Earlier it
said it would issue bonds valued at US$ 100 million this year to finance
investment. Its President Eteng A Salam said the company has 20 projects
related to oil and gas industry valued at Rp 700 billion (US$ 77.5 million) mostly
to be carried out this year related. The company said it is starting work in the X-
Ray offshore block of Pertamina EP in the Java Sea.

74 Indonesian Commercial Newsletter – March 2008


Corporate News in Brief

MATAHARI SALES EXCEED US$ 1 BILLION. Sales by publicly listed retail


company PT Matahari Putra Prima were estimated to reach almost Rp 10 trillion
(US$ 1.1 billion) last year, up from Rp 8.5 trillion in the previous year. A company
Director Danny Kojongian said, this year the company hopes to chalk up a 20%
increase in sales with plan to open nine new outlets of hypermarket and 8
outlets of department store. The company plans to invest Rp1.2 trillion this year,
he said. Meanwhile, another Director of the company Carmelito J. Ragaldo said
Matahari Putra plans to increase the number of its hypermarket outlets to 95
units in 2011. Matahari now has 38 hypermarket outlets including one coming
on line in Jakarta in March. Carmelito said most shoppers now prefer
hypermarket rather than supermarket for shopping as hypermarket offer greater
convenience and guarantee in the availability of goods. She said the number of
supermarket outlets of Matahari has declined sharply from 65 in 2004 to 32 at
present. Part of them have been converted into hypermarket outlets and other
were closed down for poor performance.

ADAM AIR OPERATION SUSPENDED. The government finally decided to


revoke the flight certificate of Adam Air after earlier serving warning about poor
flight safety system of the ailing airline. The decision could well be the final blow
to the airline amid split between its co-owners. Bhakti Investa which owns 50%
of the airline announced plans last week to quit accusing the management
controlled by its co owner of being not transparent in financial report. Air
Transport Director General Budhi Muliawan said Adam Air would not be allowed
to fly for at least three months after investigators found negligence of flight
regulations causing potential threat to safety. The government has warned Adam
Air to improve its safety system following recent accident at the Batam’s Heng
Nadim airport when one of its aircraft skidded injuring a passenger. The airline
has met a series of accidents since 2006 with the worst on January 1, 2007
when one of its Boeing 737-400 planes plunged into the sea off Makassar killing
all 104 on board.

CPP TO INCREASE INVESTMENT TO FINANCE PLANTING OF SEEDLINGS.


PT Charindo Palma Plantations (CPP) plans to invest US$ 280 million more in
oil palm plantations in the country after starting planting seedlings in its new
plantations. The additional investment will be needed to finance planting of
seedlings in plantations of its three subsidiaries – PT Satria Multi Sukses, PT
Charindo Palma Oetanma and PT Airlangga Sawit Jaya -- which have 67,500
hectares of oil palm plantations in West Kalimantan. Junaidi Sungkono, president
of CPP, which is a subsidiary of Charoen Pokphand, said the first phase of
planting in the three plantations already cost more than US$ 100 million.
Additional investment of US$ 100 million will be needed by Satria Multi Sukses,
which has the largest plantation of 29,000 hectares. The other two will need US$
90 million each. By the end of this year Satria Multi Sukses will finished planting
over 3,000 hectares of its land, Charindo Palm 2,000 hectares and Airlangga
Sawit 1,000 hectares. * * *

Indonesian Commercial Newsletter – March 2008 75


ECONOMIC NEWS IN BRIEF

INDONESIA-BRAZIL TO COOPERATE TO DEVELOP BIO-ETHANOL FUEL.


Indonesia will cooperate with Brazil to develop bioethanol to provide alternative fuel
in the country, an official said. Agriculture Minister Anton Apriyantono said Brasil
has succeeded in developing and expanding bioethanol industry in the past 35
years. That country sells bioethanol at a price below the price of gasoline. Indonesia,
therefore, wants to ask Brazil to help develop bioethanol industry in the country.
Cooperation between the two countries could be implemented throuigh exchange of
technicians and experts. State-owned sugar company Rajawali Nusantara Indonesia
(RNI) will represents the government in establishing cooperation with Brazil, Anton
said. Meanwhile, Plantation Director General Achmad Mangga Barani said the
country will also use cassava and sorgum as the basic material for bioethanol this
year. Until 2007, for that purpose cassava has been grown over 52,195 hectares of
land including by Medco, Sungai Budi and BPPTB in Lampung.

SURPLUS IN BALANCE OF PAYMENTS NARROWING IN 2007. Bank Indonesia


reported a surplus of US$ 12.5 billion in the country’s balance of payment in 2007, or
down 13.79% from US$ 14.5 billion in the previous year. The central bank attributed
the decline to smaller surplus in capital and financial accounts to US$ 2.8 billion from
US$ 2.9 billion. Meanwhile, a number of Indonesian companies have invested more
money abroad. with an increase in current account surplus that reached US$ 11
billion in 2007 up from US$ 10.8 billion in 2006. In the last quarter of 2007 surplus in
balance of payment was recorded at US$ 3.4 billion, up from US$ 2.7 billion in the
same period a year before. The surplus in the balance of payment came from
current account surplus of US$ 3.4 billion and surplus in capital and financial
accounts of US$ 0.5 billion. The current account surplus was larger in the last
quarter of 2007 than in the same period in 2006. The increase in the surplus was
attributable to srong growth in the export of non oil/gas commodities. The country’s
foreign exchange reserve by the end of 2007 was recorded at US$ 56.9 billion
enough to finance exports and service foreign debt for 5.7 months. The central bank
predicted the country’s foreign exchange reserve will rise to US$ 68.2 billion by the
end of this year.

EXPORTS OF TEXTILE AND GARMENTS PREDICTED TO RISE 10% IN 2008.


The country’s textile and textile products (TPT) industry is predicted to grow in
performance by 10% this year despite shrinking exports to the United States.
Exports are expected to fall to the United States, which is now facing potential
recesssion, but the decline will be offset with an increase in exports to Europe and
Japan, the Indonesian Textile Association (API) said. API chairman Ade Sudradjat
said the appreciation of euro will boost exports to Europe, and exports to Japan will
increase with the implementation of the new economic pact Economic Partnership
Agreement (EPA). Ade, however, predicted stagnancy even decline in sales on the
domestic market with still rampant smuggling from China, Vietnam and Bangladesh.
Even European products have been smuggled into the country, he said. He called
for greater effciency of the customs and excise office in battling smuggling. Ade
said TPT exports in 2007 grew 9% to US$ 9.9 billion from US$ 9.2 billion in 2006,
but sales on the domestic market fell 5%. He said local products have a market

76 Indonesian Commercial Newsletter – March 2008


Economic News in Brief

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.

INDONESIA RANKS AMONG 25 LARGEST INVESTMENT DESTINATION


COUNTRIES. Indonesia has been included among 25 largest foreign direct
investment (FDI) destination countries in the world. The country has succeeded in
improving its competitiveness, a deputty chief of the Capital Investment Coordinating
Board (BKPM) Luky Eko Wuryanto said. Indonesia is the 21st in the list of 25 most
attractive countries for FDI, Luky said, quoting a World Bank report. The report said
that Indonesia has also improved its business competitiveness from the rank of 135
in 2007 to 123 at present. Lucky said the improvement gave greater optimism that
FDI will grow in the country in the coming years although improvements still needed
especially in the infrastructure sector. The country’s huge natural resources remain a
strong attraction for foreign investment. In 2007, Indonesia became the world’s
largest producer of palm oil with production at 17 million tons in CPO putting
Malaysia behind. Similarly, Indonesia has become one of the world’s largest
producers of cacao with production totaling 700,000 tons in 2007. In tin production,
Indonesia is the world’s second largest with production reaching 65,000 tons in
2007. The country is the fourth in copper production with output of 818,000 tons and
the fifth in nickel production with output of 4.35 million tons.

STATE BUDGET DEFICIT JACKED UP BY SOARING OIL PRICES. The


government is dithering and almost at a loss how to deal with the surging oil prices
which have crossed a new all time record of more than US$ 110 per barrel. The
2008 state budget was barely implemented but it already needed overhauling. Draft
revision was already proposed but the revision might needed further revamping with
the oil price continuing to leap frog. Without revision, the state budget deficit could
swell to 4.2%, Finance Minister Sri Mulyani Indrawati said. The deficit could widen to
Rp 86.8 trillion or 2% of the GDP from Rp73.3 trillion or 1.7% projected earlier. The
increase in deficit is caused by growing subsidy needed on oil fuels, electricity, food
and fertilizers. Profit sharing (PSH) and non-PSH taxes are projected to increase
from Rp 97.9 trillion to Rp 208.6 trillion. Subsidies on oil fuels and electricity will
double from previous estimate. In the draft revision of 2008 budget already
proposed earlier, oil fuel subsidy shot up from Rp 45.8 trillion to Rp 106.2 trillion
and electricity subsidy surged from Rp 29.8 trillion to Rp 55 trillion. Apart from oil
prices, increases in the prices of foods products contribute to a rise in non energy
subsidy from Rp 22.3 trillion to Rp 47.4 trillion including food subsidy that rose from
Rp 6.6 trillion to Rp 9.2 trillion. A decline in oil output from earlier target of 1.034
million barrels per day also contribute to the increase in fuel subsidy. The
government and the House of Representatives are yet to decide on the new target
expected between 910,000 barrels, 927,000 barrels and 960,000 barrels per day.
Every decrease of 10,000 barrels in daily output will result in an increase in deficit by
Rp 1.5 trillion, the government said.

* * *

Indonesian Commercial Newsletter – March 2008 77


APPENDICES

DIRECTORY OF MULTIFINANCE COMPANIES IN INDONESIA


Adira Dinamika Multifinance
Office address: Jasindo Building 12th floor, Jl. Menteng Raya No. 21
Jakarta – 10340
Phone: (021) 391 8686
Fax No.: (021) 392 4826, 392 4827
Website: http://www.adira.co.id
E-mail: andi.tirta@adira.co.id
Line of business: Multifinance industry
Management/Contact: Theodore Permadi Rachmat (President Commissioner)
Stanley Atmadja (President Director)
Marwoto Subiakto (Director of Financing and Credit)
Astra Auto Finance
Address: Jl. TB Simatupang No. 90 Tanjung Barat, Jagakarsa
Jakarta – 12530
Phone : (021) 7885 9000; 7669000
Fax No.: (021) 7885 1220
Website: www.autocybercenter.com
E-mail: daniel.s@acc.co.id
Line of business: Multifinance industry
Management: Mr. Budi Kaliwono
Mr. Morio Shoda
Mr. Helmy Santoso
Astrido Pacific Finance
Address: Toyota Building, 3rd Floor, Jl. Balikpapan Raya No. 7
Jakarta – 10160
Phone : (021) 231 2220, 231 2221
Fax No.: (021) 231 0053, 345 1334
Website: www.astrido-finance.co.id
E-mail: apf@cbn.net.id
Line of business: Multifinance industry
Management: Mr. Edhi Moeljono
Mr. Sarwoko
Mr. Arthur Gunawan
BFI Finance Indonesia, Tbk
Address: Menara Kebon Sirih, 25th Floor, Jl. Kebon Sirih No. 17-19
Jakarta – 10340
Phone : (021) 3910110, 3920061, 3920091;
Fax No.: (021) 3912005, 3920607
Website: www.bfi.co.id
E-mail: Biro-sekretariat@bfi.co.id; yulita@bfi.co.id; Sudjono@bfi.co.id
Line of Business: Multifinance industry
Management: Mr. Francis Lay (President Director)
Mr. Cornellius Henry

78 Indonesian Commercial Newsletter – March 2008


Appendices

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

Indonesian Commercial Newsletter – March 2008 79


Appendices

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

80 Indonesian Commercial Newsletter – March 2008


Appendices

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
* * *

Indonesian Commercial Newsletter – March 2008 81


Appendices

1. ECONOMIC INDICATORS

Indonesia’s inflation by Group of Commodities,


2005– 2008*) (2002=100)
Year/ Food Prepared Housing, Cloth- Medi- Education, Trans- Gene
ing cal port, ral
Month Stuff Food, Water, Care Recreation Comm. &
Beverage Electricity & Sports Financial
Cigarette Gas and Services
&Tobac-co Fuel
2005 13.91 13.71 13.94 6.92 6.13 8.24 44.75 17.11
2006 12.94 6.36 4.83 6.84 5.87 8.13 1.02 6.60
2007 11.26 6.41 4.88 8.42 4.31 8.83 1.25 6.59
Jan. 2.68 0.87 0.71 -0.25 0.54 0.10 0.10 1.04
Feb. 0.84 0.65 0.80 0.56 0.64 0.23 0.03 0.62
March 0.16 0.36 0.29 0.41 0.20 0.03 0.09 0.24
April -1.30 0.38 0.26 0.61 0.32 -0.03 0.22 -0.16
May -0.39 0.47 0.35 0.21 0.18 0.01 0.13 0.10
June 0.47 0.33 0.13 -0.43 0.22 0.03 0.11 0.23
July 1.35 0.40 0.32 0.61 0.35 2.89 0.05 0.72
August 0.79 0.48 0.77 0.49 0.24 3.18 0.04 0.75
Sept. 1.81 0.45 0.18 1.22 0.44 1.70 0.07 0.80
Oct. 1.87 0.51 0.21 2.05 0.45 0.21 0.47 0.79
Nov. 0.04 0.43 0.12 1.66 0.26 0.11 -0.27 0.18
Dec. 2.47 0.91 0.63 0.99 0.41 0.12 0.22 1.10
2008 2.77 2.02 1.80 2.31 0.72 0.01 0.24 1.77
Jan. 2.77 2.02 1.80 2.31 0.72 0.01 0.24 1.77
Feb. 1.59 0.88 -0.01 0.76 1.56 0.04 0.02 0.65
Source: BPS (Central Bureau of Statistic)

Monthly Indonesia's Consumers Price Indices


and Inflations, 2005-2007, Feb. 2008 (2002 = 100)
Months 2005 2006 2007 2008
Inflations Inflations Inflations Inflations
January 1.43 1.36 1.04 1.77
February -0.17 0.58 0.62 0.65
March 1.91 0.03 0.24
April 0.34 0.05 -0.16
May 0.21 0.37 0.10
June 0.50 0.45 0.23
July 0.78 0.45 0.72
August 0.55 0.33 0.75
Sept. 0.69 0.38 0.80
Oct. 8.70 0.86 0.79
Nov. 1.31 0.34 0.18
Dec. -0.04 1.21 1.10
Inflation rate 17.11 6.60 6.59
Source: BPS (Central Bureau of Statistic)

82 Indonesian Commercial Newsletter – March 2008


Appendices

2. EXPORT AND IMPORT

Indonesia's Export Development, 2005 – 2008 *)

FOB value (US$ million)


% Growth
2007 Jan.
2006 Jan. 2008
Jan- 2008
Descriptions 2005 2006 Jan-Dec. over 2007
Dec. *)
Total Exports 85,661 100,799 100,799 114,023 11,085 33.19
Oil & Gas 19,232 21,209 21,209 22,081 2,215 45.65
Crude Oil 8,146 8,168 8,168 9,226 832 36.77
Oil Products 1,932 2,843 2,843 2,871 258 39.78
Gas 9,154 10,197 10,197 9,983 1,124 54.58
Non Oil and
Gas 66,429 79,589 79,589 91,942 8,869 30.41
Agriculture 2,880 3,365 3,365 3,937 357 51.38
Manufacturing 55,594 65,024 65,024 75,925 7,508 39.81
Mining &
others 8,039.1 11,200.4 11,200.4 12,075 1,003 -16.00
Source: BPS (Central Bureau of Statistic)

Indonesia's Import Development, 2005 – 2007

CIF value (US$ million)


% Growth
2007 Jan.
2006 Jan. 2008
Jan- 2008
Jan-Dec. over 2007
Dec. *)
Descriptions 2005 2006
Total Import 57,547.3 61,065.5 61,065.5 74,402.7 7,601.9 43.88
Oil & Gas 17,391.1 18,975.1 18,962.9 21,879.6 1,928.5 38.53
Crude Oil 6,797.0 7,852.5 7,852.6 9,056.7 971.8 67.29
Oil Products 10,579.2 11,082.5 11,080.3 12,733.7 956.7 17.94
Gas 14.9 30.1 30.0 89.2 0.0 -
Non Oil and
Gas 40,156.2 42,103.0 42,102.6 52,523.1 5,673.4 45.79
Consumption
4,738.2 6,624.1 582.2 33.87
Goods 4 620,5 4 839,7
Raw Materials/
47,171.4 56,527.3 5,723.4 38.03
Auxiliary Goods 44 792,0 47 165,7
Capital Goods 8 288,4 9 072,7 9,155.9 11,251.3 1,296.3 84.61
Source: BPS (Central Bureau of Statistic)

* * *

Indonesian Commercial Newsletter – March 2008 83


Appendices

3. GROSS DOMESTIC PRODUCT

The Value of Gross Domestic Product By Industrial Origin


At Current Price and At Constant Price 2000

(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)

The Growth of GDP by Type of Expenditure


(Percentage)
Type of Expenditure 2004 2005 2006 2007 *) 2007
Year
on
Year
Private Consumption 4.9 3.9 3.2 4.9 5.29
Expenditure
Government Consumption 1.9 8.1 9.6 4.7 6.53
Expend.
Gross Domestic Fixed Capt. 15.7 9.9 2.9 7.9 8.83
Formation
Export of goods and services 8.5 8.6 9.2 8.8 7.78
Import of goods & services 24.9 12.3 7.6 8.0 8.15
GDP 5.1 5.6 5.5 6.3 6.5
Source: BPS (Central Bureau of Statistic)
*) January – September 2007

* * *

84 Indonesian Commercial Newsletter – March 2008


Appendices

4. OIL PRICE AND FOREIGN EXCHANGE

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

FOREIGN EXCHANGE AND GOLD PRICE IN JAKARTA


ITEM Today 1 month 3 months One year
3-28-2008 ago ago Ago
-FOREIGN EXCHANGE (RUPIAH)
US$ Buying 8,728 8,607 8,515 8,895
Selling 9,728 9,607 9,515 9,895
Pound. 17,517 17,087 17,250 16,449
19,528 19,076 19,279 18,357
Aust. $ 8,035 8,007 7,317 6,608
8,960 8,940 8,181 7,352
Sin. $ 6,313 6,161 5,614 5,598
7,042 6,882 6,275 6,231
Mal. $ 2,850 2,830 2,585 2,425
2,875 2,860 2,620 2,700
Hk. $ 1,121 1,106 1,091 1,146
1,250 1,234 1,219 1,274
Yen 87.70 83.50 70.14 78.24
97.78 93.24 78.38 87.06
Euro 13,781 13,083 11,390 11,368
15,364 14,606 12,728 12,648
GOLD PRICE (RP/GRAM)
- Gold 24 carat 285,000 285,000 187,500 186,500
AVERAGE INTEREST RATE
- JIBOR
a. Over night (O/N) 6.2 8.0 5.2 3.0
b. 1 month 7.9 7.8 8.5 8.9
- BI Rate
1 month 8.0 8.0 8.5 12.75
- SBI (Primary market)
1 month 8.0 8.0 8.5 11.00
Notes : SBI = Bank Indonesia Certificates, SBPU = Money Market Securities
JIBOR = (Jakarta Interbank Offered Rate)
n.a. = Data not available
Source: Bank Indonesia/Data Consult * * *

Indonesian Commercial Newsletter – March 2008 85


Appendices

5. THE INDONESIAN ECONOMIC TRENDS


Items 2003r) 2004r) 2005r) 2006r) 2007e)
1. The growth rate of GDP 4.0 5.1 5.6 5.5 6.5
(% p.a.)
- GDP per capita (US$) 1,116 1,207 1,320 1,663 1,710
- GNP per capita (US$) 1,072 1,165 1,256 1,591 1,612
2. Total export (US$ bill) 61.1 71.6 85.6 100.7 113.9*)
Total increase (%) 6.8 9.3 19.5 17.5 13,0
Non-oil/gas(US$ billion) 47.4 55.9 66.4 79.5 91.9
Non-oil Increase (%) 5.3 17.9 18.5 19.6 15.5

3. Total import (US$ bill) 32.6 46.2 57.5 61.07 74.4*)


Total increase (%) 4.1 39.5 23.6 5.8 21.8
Non-oil/gas(US$ billion) 24.9 34.5 43.4 42.1 52.5
Non-oil increase (%) 0 35.7 15.4 4.62 24.7

4. Current account (US$ bill) 6.1 5.9 8.0 9.6 11.0

5. Reserve assets (US$ bill) 36.2 36.3 34.7 42.5 55.9


(End of the year)

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

7. Bank credit (Rp trill.) 437.9 553.5 689.6 787.1 953.2


Increase in 12 months(%) 19.8 26.4 20.2 11.7 14.4

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

9. Average interest rate (% p.a.)


a. 3 month time deposit in Rupiah
-State bank 10.70 6.26 8.17 9.60 7.28
-Private bank 10.88 6.61 8.18 9.88 7.67
b. Short-term credit
-State bank 16.0 14.6 15.2 15.2 14.3
-Private bank 18.8 15.9 16.0 17.2 15.1

10. Inflation rate, % p.a 5.06 6.40 17.11 6.6 6.6


-Inflation Jan. – Dec. 2007 6.59

11. Population (million peoples) 211.6 214.4 216.6 219.3 222.1


Notes : r) Revised figures
*) January – December 2007
e) Estimate by Data Consult
p) Projection revision figures
n.a. = data not available
Source: Bank Indonesia, Central Bureau of Statistic and Data Consult

* * *

86 Indonesian Commercial Newsletter – March 2008


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