Number of Financing Companies Drops

The number of financing companies has been dropping since 2009 due to permit revocation. Based on the Capital Market and Financial Institution Supervisory Agency (Bapepam-LK) data, there were 212 financing companies in 2008. By 2010 only 192 remained.

Wiwie Kurnia, Head of Indonesian Association of Financing Companies, said that business permit revocations do not impact on the growth of the financing industry because these companies were no longer operational. "If the companies are operational, their contribution was small," she said.

According to Wiwie, permit revocation is one of the methods to discipline companies who violate regulations. Only those who are financially sound and are active in their business activities should remain.

Based on data from the Supervisory Agency, loan distribution in 2009 increased by 3.86 percent to Rp 142.54 trillion from Rp 137.23 trillion in 2008. In 2010, loan distribution grew 29.8 percent to Rp 185,1 trillion.

Ihsanudin, Head of Financing and Guarantee of the Supervisory Agency, said that companies whose permits are revoked are those mostly in the leasing and factoring sector. According to Ihsanudin, these companies did not conduct business activities and lacked the Rp 100 billion capital.

"We tighten the rules on new permits for financing companies so that their permits will not be revoked later on," he said, without giving detailed information on the rules.

In 2009, there were only 198 financing companies. In the same year, the Supervisory Agency revoked the permits of 16 companies and gave only two new permits.

In 2010, financing companies decreased to 192. The Supervisory Agency revoked permits of 13 companies and gave seven companies new permits.