adb sme development ta

ADB SME
DEVELOPMENT TA
BACKGROUND REPORT
ENHANCING THE ROLE OF FACTORING AS A TOOL
FOR FINANCING SMALL AND MEDIUM
ENTERPRISES IN INDONESIA
WOLFRAM HIEMANN
NOVEMBER 2001
Published by:
ADB Technical Assistance
SME Development
State Ministry for Cooperatives & SME
Jalan H.R. Rasuna Said Kav.3
Jakarta 12940
Tel: ++62 21 520 15 40
Fax: ++62 21 527 94 82
e-mail: [email protected]
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I. TABLE OF CONTENTS
I.
TABLE OF CONTENTS ........................................................................................... I
II.
TABLE OF ABBREVIATIONS ............................................................................... III
III.
TABLE OF FIGURES .............................................................................................IV
IV.
TABLE OF REFERENCES .....................................................................................V
V.
GLOSSARY............................................................................................................VI
VI.
EXECUTIVE SUMMARY .......................................................................................VII
VII.
RINGKASAN EKSEKUTIF......................................................................................X
1
FACTORING IN INDONESIA .................................................................................. 1
1.1
Background.............................................................................................................. 1
1.2
Definition .................................................................................................................. 1
1.3
Purpose.................................................................................................................... 3
1.4
Regulations and Legal Aspects ............................................................................... 4
2
FACTORING PRACTICE IN INDONESIA............................................................... 6
2.1
From Past to Presence ............................................................................................ 6
2.2
Financial Development of Factoring Companies ..................................................... 7
2.3
Factors in Indonesia................................................................................................. 9
2.4
Location ................................................................................................................. 12
2.5
Source of Finance.................................................................................................. 12
2.6
Service of Factors .................................................................................................. 13
2.7
Cost of Factoring.................................................................................................... 13
2.8
Clients of Factor..................................................................................................... 13
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2.9
Marketing Efforts.................................................................................................... 14
2.10
Market Prospects and Potential ............................................................................. 14
2.11
International Factoring ........................................................................................... 16
3
CONCLUSIONS AND RECOMMENDATIONS ..................................................... 18
3.1
Problems................................................................................................................ 18
3.2
Requests................................................................................................................ 18
3.3
Recommendations and Suggested Actions ........................................................... 19
3.3.1
Access to Funds..................................................................................................19
3.3.2
Other Recommendations to Enhance SME Financing........................................20
II
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II. TABLE OF ABBREVIATIONS
ADB
A/R
ASEI
ALI
APPI
BCI
BEI
BI
BII
BII-FC
CEM
CP
FCI
IBRA
IFS
IMF
KUKMI
L/C
LPJK
MoF
MFC
NIF
PBT
PKM
PN
SMM
TA
UKM
UNCITRAL
Asian Development Bank
Account Receivables
Asuransi Ekspor Indonesia
Asosiasi Leasing Indonesia
Asosiasi Perusahaan Pembiayaan Indonesia
Bakrie Capital Indonesia
Bank Ekspor Indonesia
Bank Indonesia
Bank International Indonesia
Bank International Indonesia Finance Center
Client Enquiry Module
Commercial Paper
Factors Chain International
Indonesian Bank Restructuring Agency (Badan Penyehatan
Perbankan Nasional)
International Factors Singapore
International Monetary Fund
Kerukunan Usaha Kecil dan Menengah Indonesia
Letter of Credit
Lembaga Pengawasan Jasa Keuangan
Ministry of Finance
Multifinance Company
Niaga International Factor
Profit Before Tax
Pengusaha Kecil dan Menengah
Pengadilan Negeri
Sinar Mas Multifinance
Technical Assistance
Usaha Kecil dan Menengah (Small and Medium Enterprises)
United Nations Commission on International Trade Law
III
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III. TABLE OF FIGURES
Figure 1:
The Mechanism of Factoring .............................................................................2
Figure 2:
Development of Factoring Portfolio ...................................................................7
Figure 3:
Development of Factoring Investment ...............................................................8
Figure 4:
Multifinance Portfolio Quality .............................................................................8
Figure 5:
International Affiliation of Factoring Companies ................................................9
Figure 6:
Multifinance Companies Engaged in Factoring ...............................................10
Figure 7:
Investments in Multifinance Companies ..........................................................11
Figure 8:
Source of Finance for MFC..............................................................................12
Figure 9:
Profitability of Factoring in SE Asia: International Factors Singapore (IFS) ....13
Figure 10:
Typical Factoring Clients and Customers ....................................................14
Figure 11:
Factoring Turnover (volume) for Year 2000 .................................................16
IV
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IV. TABLE OF REFERENCES
Author
Title
Anonymous
“Factoringbranche sieht sich im Aufwind”, Kreditpraxis
3/2001 p.2.
Badan Pusat Statistik
Bett, K., et al.
Statistik Lembaga Keuangan 2000.
“Factoring auf Erfolgskurs: Internationales Geschaeft
lebhaft“, Kreditpraxis 3/1999, p. 14 f.
Indonesia Banks: Survival of the Fittest, 1998,
www.adb.org/Documents/Books/Rising_to_the_Challenge/In
donesia/indo-bnk.pdf.
Chou, C
Data Consult Inc.
Financing Industry in Indonesia "Surviving Amidst the
Crippled Banking Industry", February, 2000.
Infobank
“Hai, Multifinance Mau Diapakan”, May 1999.
“Anak Tiri Bermain Motor”, January 2000.
“Anjak Piutang yang tak Beranjak”, June 2000.
“Peluang dan Tantangan Sama Besar”, March 2001.
“Langit Terang – Milik Pihak Asing?”, March 2001.
“Modal Cekak, Siapa Peduli”, April 2001.
“Pasar Besar, Uang Kurang”, May 2001.
“Leasing Jalan, Tetap Pusing”, June 2001.
“Laju Kencang Pembiayaan Motor”, July 2001.
“Pasar Motor di Jalan Berlubang”, August 2001.
“Deru Mesin Pembiayaan di Kota Pahlawan”, August 2001.
“Momentum Tepat Restrukturisasi Utang”, September 2001.
Kaufhold, K.
“Factoring: Gutes Umsatzwachstum“, Kreditpraxis 3/1998, p.
4 ff.
“Factoring in Osteuropa: Raum fuer Expansion“, Kreditpraxis
3/1998 p. 8 ff.
Olbort, S.
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V. GLOSSARYª
Anjak Piutang (Factoring)
BPS: Anjak piutang adalah usaha yang melakukan kegiatan pembiayaan perusahaan
dalam bentuk pembelian dan atau pengalihan serta pengurusan piutang atau tagihan
suatu perusahaan dari transaksi perdagangan dalam atau luar negeri.
MenKeu: Anjak piutang adalah kegiatan pembiayaan dalam bentuk pembelian dan/atau
pengalihan serta pengurusan piutang atau tagihan jangka pendek suatu perusahaan dari
transaksi perdagangan dalam atau luar negeri.
Customer Anjak Piutang (Factoring Customer)
Customer anjak piutang adalah pihak yang mempunyai hutang kepada klien, di mana
sebelumnya customer mengadakan transaksi pembelian barang dan jasa dengan sistem
kredit kepada pihak klien.
Klien (Client)
BPS: Klien adalah pihak yang menjual piutang kepada perusahaan anjak piutang.
MenKeu: Penjual piutang adalah perusahaan yang menjual dan/atau mengalihkan
piutang atau tagihannya yang timbul dari transaksi perdagangan kepada Perusahaan
Pembiayaan.
Nilai Pembiayaan Anjak Piutang (Financing Value of Factoring)
BPS: Nilai pembiayaan anjak piutang adalah nilai pembelian piutang yang telah disetujui
kedua belah pihak antara klien dan perusahaan factoring yang dinyatakan dalam suatu
perjanjian kontrak. Nilai pembiayaan umumnya lebih kecil dari nilai piutang yang
dialihkan, karena diperhitungkan faktor bunga dan risiko kelancaran pembayaran.
Nilai Pengalihan Piutang (Factoring Receivable Value)
BPS: Nilai pengalihan piutang adalah nilai hutang yang harus ditagih perusahaan
factoring kepada customer.
Factoring Volume
Amount of A/R purchased during a period.
Factoring Portfolio or Outstanding
Amount of A/R purchased but not yet settled by customers. As bills are settled after less
than one year the volume will be higher than the portfolio according to the formula:
Portfolio x 360
Factoring volume =
average number of days until bills are
settled
ª http://www.bps.go.id/glossary/indo/lpembiayaan.shtml, 3 October 2001.
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VI. EXECUTIVE SUMMARY
Sector Descriptions
¾ Factoring is an alternative instrument to finance trade credit. Legally, it is not a credit.
Factors buy accounts receivables (with a discount) from producers shipping their
goods to buyers who, for various reasons do not settle their trade debt immediately.
Factors pay immediately 80% to 90% to their "clients" and wait until they receive the
payment from the "customer" (buyer).
¾ Factoring is a suitable instrument, in particular for SME, to develop their business
through securing quick cash flow. It allows them to generously offering trade credit as
a marketing instrument. Originally, the factor took over the risk that the buyer fails to
settle his account ("non-recourse factoring"). Indonesian factors prefer "with recourse"
factoring. They return (re-sell) the accounts receivables (A/R) to their clients if the
buyer does not pay. Compared to banks, factors operate flexible, they respond
immediately, and they regard A/R as collateral with a high value. They must not
comply with capital adequacy rules, legal lending limits and minimum deposits. But
their source of finance is limited to equity and bank loans.
¾ In Indonesia, practicing factoring is not new. Informal factors buy "bilyet giro", "bon
putih" or post-dated cheques, particularly in wholesale markets. Formal factoring is an
activity of multifinance companies (MFC) for which a Government regulation was
issued in 1988, improved in 1995, and again rewritten in 2000. Until 1995, 245 MFC
received a license. For five years no new license was issued. Three applications were
received until October 2001. Many MFC did not intend to engage in factoring. Only
about 20 to 30 companies are said to (have) practice "real" factoring, some on a tiny
scale.
¾ End of 1997, the portfolio of factors peaked amounting to Rp 10.1 trillion or 2.6%
compared to bank lending, a high figure compared to other countries. MFC were
severely hit by the prolonged financial crisis. More than 130 MFC came under the
supervision of IBRA (Indonesia Bank Restructuring Agency, BPPN). Data from 107
MFC, probably the healthier ones, and show that more than 37% recorded equity
below the paid-up capital minimum demanded by regulations. End of June 2001,
factoring advances amounted to Rp 4.0 trillion ($400 million) out of which Rp 3.0
trillion (75%, up from 0.5% end of 1996) were bad debt. It is said that this disaster is a
result of "fictive" transactions, those that were not based on sale of goods and
services, between large companies belonging to the same conglomerate. MFC were
set up to assist circumventing banking regulations.
¾ The factoring volume (purchase of A/R, "turnover") amounted to Rp 2.6 trillion ($260
million) in 2000 whereas current advances by factors amount to Rp 1 trillion. During
the first semester 2001 the transaction volume reported from 35 multifinance
enterprises decreased again to Rp 716 billion. 15 enterprises recorded a volume of
more than Rp 5 billion ($500,000). However, throughout discussions held in Jakarta,
only two companies, both internationally affiliated, were repeatedly mentioned being
engaged in factoring. Together, they hardly account for a factoring portfolio of more
than Rp 100 billion ($10 million), less than 0.05% if compared to all bank loans. This is
tiny. Factoring that other MFC perform is probably limited to "maintenance" of few
established large clients, and to recovery efforts. Factoring seems to be hardly
accessible by new clients.
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¾ The actual demand, also from SME, exceeds the financing capacity of any factor. The
market is far from being saturated. Within three to five years, the portfolio could easily
more than triple. Still, the amount would remain very small in view of other sources of
finance.
¾ Soft regulations governing factoring and the absence of any effective government
supervision and intervention invited malpractice. These prompted financial losses for
investors and banks, finally, through bank recapitalization, increased public debt, and
resulted in a loss of trust in the industry. Sources of finance badly needed by
businesses, also for the development of SME, have dried up. At the same time,
consumer finance, a Rp 55 trillion market volume (year 2000), became much more
attractive.
¾ In fact, factoring is dubbed as an SME finance instrument. It is a suitable alternative
for financing sales of SME, not only, but in particular, when they sell their goods and
services to large corporate enterprises or buyers abroad. Measures supporting
factoring companies could almost certainly benefit SME.
¾ Based on results of IMF recommendations, MoF is engaged in a detailed program to
upgrade regulations and procedures concerning MFC. Some of the following
suggestions may repeat those already expressed by other parties.
¾ Enhancing factoring to benefit SME needs most of all improvements in the regulatory
framework. It is paramount that investors and banks regain trust in financing factoring
companies.
Recommendations
¾ It is proposed that MFC are given the opportunity to upgrade to become specialized
factoring-only companies adhering to strict regulations on one hand and allowing
broader access to funds on the other hand:
a) The government should issue a special decree governing single-purpose factoring
companies and their activities. The regulations should incorporate lessons learned
from the crisis and experience from the banking sector, e.g., concerning issues like
improved rules on portfolio quality calculation, maximum exposure to individual
debtors, adherence to healthy financial ratios, responsibilities of the management,
etc. Special guidelines for assessing factoring companies should be developed
permitting risk rating of the institution. It is suggested to improve the flexibility to
respond to market demands through reviewing awkward procedures to open
branch offices.
b) Rules for supervision, e.g., by LPJK (Lembaga Pengawasan Jasa Keuangan), the
future agency supervising financial institutions, for reporting requirements, and
actions stipulating compulsory recapitalization or immediate closure should be put
in place and enforced. (The MoF is already working on this.)
c) In turn, risk rated single-purpose factoring companies should be allowed to
compete for funds from insurance companies, foundations, pension funds and
from private investors, be it in the form of equity or as liability like issuing
commercial paper (CP) (for which, however, the government expressively should
not take over any guarantee!).
d) Rated factoring companies should be given access to funds earmarked for
developing SME, for example those funds that are channeled through a secondVIII
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tier bank (a wholesale financial institution, a proposal of the ADB-TA SME
Development), with the objective to support SME.
e) A regulation demanding that only banks can become clients of Bank Export
Indonesia should be reviewed in favor of rated factors financing SME exports.
¾ The following are recommendations to support factors aimed at reducing risk and
review of regulations concerning foreign ownership:
1) Factoring companies should be allowed access to and participation in the BI-run
credit information system, a step requested by factors and banks as well.
2) The government should review regulations on legal issues: (i) The rules pertaining
to assignments of accounts receivables (A/R) should be codified and a security
registration system would be put in place. (ii) When codifying A/R (and other
securitites) rules, the government should consider recommendations laid down in
the Ottawa Convention and UNCITRAL (United Nations Commission on
International Trade Law) convention on international factoring aiming at supporting
export.
3) It is suggested to review whether allowing a 100% foreign factoring company
ownership could be beneficial, in particular with regard to gaining foreign
investment and enhancing exports.
¾ Although the data are used for different purposes, the advantages of parallel reporting
to and data collecting and processing by BI and MoF remain entirely unclear. In order
to streamline and improve government procedures, a review is urgently recommended
so that one institution gathers the data and both have access to these data.
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VII. RINGKASAN EKSEKUTIF
Deskripsi Sektor
¾ Anjak piutang (Factoring) adalah perangkat alternatif untuk membiayai kredit
perdagangan. Secara legal, anjak piutang bukanlah kredit. Factors membeli tagihan
tertentu dengan perhitungan diskonto dari produser dalam pengapalan barang-barang
mereka kepada pembeli yang dituju, untuk mengatasi berbagai alasan tidak
diselesaikannya piutang dagang dengan segera. Factors membayar segera 80%
sampai 90% kepada “klien” mereka dan menunggu sampai mereka menerima
pembayaran dari “kastemer” (buyer).
¾ Anjak piutang merupakan perangkat yang cocok, khususnya bagi Pengusaha Kecil
dan Menengah (PKM), untuk mengembangkan bisnis mereka melalui pengamanan
arus kas (cash flow) secara cepat. Hal ini memberikan kesempatan bagi mereka
menawarkan banyak sekali kredit dagang sebagai instrumen pemasaran.
Sebenarnya, factors telah mengambil alih (menganjak) risiko atas piutang dari buyer
yang gagal memenuhi kewajibannya membayar (“non-recourse factoring”). Factors
Indonesia lebih suka dengan “with-recourse factoring”. Mereka menjual kembali
piutang dagangnya kepada klien mereka jika kastemer tidak membayar. Dibandingkan
dengan bank, factor beroperasi lebih fleksibel, mereka merespon dengan cepat dan
mereka menghargai piutang dagang sebagai agunan dengan nilai yang tinggi. Mereka
tidak mesti harus memenuhi ketentuan pemenuhan modal, batas maksimum
pemberian kredit dan minimum deposit. Akan tetapi sumber pembiayaan mereka
terbatas dengan modal sendiri dan pinjaman dari Bank.
¾ Di Indonesia, praktek anjak piutang bukanlah hal yang baru. Secara informal factors
membeli ”bilyet giro”, “bon putih” atau cek mundur, khususnya dalam perdagangan
partai besar. Secara formal anjak piutang adalah salah satu kegiatan dari Perusahaan
Multifinance yang diatur dalam Peraturan Pemerintah yang diterbitkan tahun 1988,
disempurnakan tahun 1995 dan diatur kembali tahun 2000. Sampai tahun 1995,
sebanyak 245 perusahaan multifinance memperoleh izin. Dalam lima tahun terakhir
tidak ada izin yang diterbitkan pemerintah. Terdapat tiga permohonan yang diterima
sampai Oktober 2001. Banyak perusahaan multifinance tidak ingin menangani anjak
piutang. Hanya sekitar 20-30 perusahaan telah mempraktekkan kegiatan anjak
piutang yang sesungguhnya, suatu skala yang kecil sekali.
¾ Pada akhir 1997, portofolio anjak piutang mencapai puncaknya sebesar Rp 10,1 triliun
atau 2,6% dari posisi pinjaman perbankan, suatu angka yang tinggi dibandingkan
dengan negara-negara lain. Perusahaan multifinance terkena dampak hebat dari krisis
keuangan yang berkepanjangan. Lebih dari 130 perusahaan multifinance pernah
berada di bawah pengawasan Badan Penyelamatan Perbankan Nasional (BPPN).
Data dari 107 perusahaan multifinance, kemungkinan yang lebih sehat,
memperlihatkan bahwa lebih dari 37% tercatat modal sendiri berada di bawah
minimum modal disetor yang diminta oleh ketentuan. Pada akhir Juni 2001, anjak
piutang yang dibiayai berjumlah Rp 4,0 triliun (US $400 juta) dan sebanyak Rp 3,0
triliun diantaranya (75%, meningkat dari hanya 0,5% pada akhir tahun 1996) menjadi
piutang macet. Dikatakan bahwa kerugian ini akibat dari transaksi fiktif, yang mana
diberikan tidak berdasarkan penjualan barang dan jasa, ini terjadi antara perusahaanperusahaan besar milik konglomerat yang sama. Perusahaan multifinance ditata
untuk membantu mereka mengelak dari ketentuan perbankan.
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¾ Volume anjak piutang (pembelian piutang, “perputaran”) berjumlah Rp 2,6 triliun
(US$260 juta) dalam tahun 2000 sedangkan pembiayaan lancar oleh factors sebesar
Rp 1 triliun. Selama semester pertama 2001 volume transaksi yang dilaporkan oleh 35
perusahaan pembiayaan menurun lagi menjadi Rp 716 miliar. Tercatat 15 perusahaan
mempunyai volume transaksi yang melebihi Rp 5 miliar (US$ 500.000).
Bagaimanapun, di seluruh diskusi yang dilaksanakan di Jakarta, hanya dua
perusahaan, keduanya memiliki afiliasi internasional, yang berulangkali menyatakan
menangani anjak piutang. Portofolio anjak piutang kedua perusahaan ini barangkali
tidak melebihi Rp 100 milyar (US$10 juta), kurang dari 0,05% jika dibandingkan
dengan posisi pinjaman seluruh perbankan. Ini kecil sekali. Anjak piutang ditawarkan
oleh perusahaan multifinance lainnya barangkali terbatas pada “memelihara” sedikit
nasabah besar yang sudah mapan dan dalam usaha-usaha penyelamatan debitur.
Anjak piutang kelihatannya sulit diakses oleh nasabah baru.
¾ Permintaan nyata akan anjak piutang juga berasal dari Usaha Kecil dan Menengah
(UKM), melebihi kapasitas pembiayaan dari berbagai factors. Pasar jauh dari
kejenuhan. Dalam tiga sampai lima tahun, portofolio dapat dengan mudah lebih dari
tiga kali lipat. Sekali lagi, jumlahnya sangat kecil jika dilihat dari sumber pembiayaan
lainnya.
¾ Penegakan peraturan pemerintah yang lunak dan absennya supervisi dan intervensi
yang effektif dari Pemerintah, mengundang timbulnya malpraktek. Hal ini
mempercepat kerugian finansial bagi investor dan bank-bank, akhirnya, melalui
rekapitalisasi perbankan, meningkatnya piutang macet publik, mengakibatkan
hilangnya kepercayaan pada industri ini. Sumber-sumber pembiayaan yang tidak baik
dibutuhkan oleh kegiatan usaha, juga bagi pengembangan UKM, telah sirna
menguap. Pada waktu yang sama, pembiayaan konsumsi, dengan volume pasar
tahun 2000 sebesar Rp 55 triliun, menjadi lebih menarik.
¾ Dalam kenyataannya, anjak piutang dijuluki sebagai salah satu perangkat pembiayaan
bagi UKM. Ini merupakan alternatif yang cocok terhadap pembiayaan penjualan, tidak
hanya, akan tetapi khusus, apabila mereka menjual barang dan jasa mereka kepada
perusahaan besar korporasi atau pembeli-pembeli di luar negeri. Langkah-langkah
mendukung perusahaan anjak piutang dapat sangat bermanfaat bagi UKM.
¾ Berdasarkan hasil rekomendasi International Monetary Fund (IMF), Menteri Keuangan
sedang sibuk dengan program rinci untuk menyempurnakan ketentuan dan prosedur
mengenai perusahaan multifinance. Beberapa saran berikut ini mungkin mengulangi
hal-hal yang telah dikemukakan oleh pihak-pihak lainnya.
¾ Mempertinggi manfaat anjak piutang kepada PKM membutuhkan banyak perbaikan
terhadap kerangka ketentuan yang ada. Yang terpenting akan membuat para investor
dan bank-bank memperoleh kembali kepercayaan terhadap perusahaan pembiayaan
anjak piutang.
Rekomendasi
¾ Disarankan bahwa perusahaan multifinance diberikan kesempatan untuk ditingkatkan
menjadi perusahaan pembiayaan khusus anjak piutang disertai dengan peraturan
yang ketat di satu pihak, dan dibolehkan memperluas akses di bidang dana di pihak
lain:
a) Pemerintah harus menerbitkan ketentuan khusus yang mengatur tentang
perusahaan khusus anjak piutang dan kegiatan-kegiatannya. Peraturan tersebut
harus memasukkan pelajaran yang diperoleh dari krisis dan pengalaman dari
sektor perbankan, seperti isu-isu yang menyangkut tentang perbaikan peranan
dari perhitungan kualitas portofolio pinjaman, maksimum pembiayaan untuk satu
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debitur, kepatuhan terhadap rasio kesehatan keuangan, tanggung jawab
manajemen dan lainnya. Petunjuk khusus mengenai penilaian perusahaan anjak
piutang harus dibuat yang mengizinkan diketahuinya peringkat risiko (“rating”)
lembaga yang bersangkutan. Disarankan untuk meningkatkan fleksibiilitas dari
perusahaan multifinance dalam merespon permintaan pasar melalui peninjauan
kembali prosedur pembukaan kantor cabang perusahaan multifinance.
b) Ketentuan untuk supervisi seperti oleh Lembaga Pengawasan Jasa Keuangan
(LPJK), lembaga supervisi institusi keuangan dimasa yang akan datang, untuk
kebutuhan pelaporan dan tindakan-tindakan yang wajib diambil dalam
rekapitalisasi atau tindakan penutupan segera yang harus diambil dan tindakan
hukum yang memaksa. (Menteri Keuangan telah mempersiapkan hal ini).
c) Pada gilirannya, perusahaan khusus anjak piutang yang telah memperoleh "rating"
harus diizinkan untuk bersaing agar dapat akses ke dana yang ada di perusahaan
asuransi, yayasan, dana pensiun dan investor swasta, diizinkan dalam
membentuk modal sendiri atau sebagai utang seperti penerbitan Commercial
Paper (CP) (dalam hal ini, bagaimanapun, dinyatakan bahwa Pemerintah tidak
tanggungjawab atas pembayaran hutang tersebut).
d) Perusahaan anjak piutang yang telah memperoleh “rating” harus diberikan akses
terhadap dana yang diperuntukkan dalam pengembangan PKM, sebagai contoh
dana-dana dimaksud disalurkan melalui bank lapis kedua (second-tier bank atau
bank yang hanya melayani UKM melalui fasilitator lembaga keuangan lain),
sebuah usulan ADB-TA SME Development, dengan tujuan mendukung PKM.
e) Persyaratan peraturan bahwa hanya bank-bank yang dapat menjadi nasabah
Bank Ekspor Indonesia (BEI) harus ditinjau kembali khususnya untuk perusahaan
anjak piutang yang membiayai ekspor.
¾ Rekomendasi-rekomendasi untuk mendukung “factors” dalam mengurangi risiko,
dapat dilihat berikut ini:
1) Perusahaan anjak piutang harus diizinkan akses kepada dan berpartisipasi dalam
sistem informasi kredit ("debtor information system") yang dilaksanakan oleh Bank
Indonesia, sebuah langkah yang dibutuhkan oleh factors, dan demikian juga oleh
bank.
2) Pemerintah seharusnya mengkaji-ulang regulasi juridis: (i)
Hal-hal yang
berhubungan dengan jual, beli, dan cesie piutang (A/R) belum diundangkan dan
tidak ada sistem untuk pendaftaran jual, beli, dan cesie piutang, (ii) sehubungan
dengan diundangkannya hal-hal yang berkaitan dengan AR seperti diatas, maka
pemerintah seyogyanya mempertimbangkan rekomendasi yang dituangkan dalam
Ottawa Convention and UNCITRAL (United Nations Commission on International
Trade Law – Hukum Perdagangan Internasional dari Komisi Perserikatan BangsaBangsa--) untuk perusahaan internasional yang mendukung ekspor
3) Disarankan untuk meninjau kembali apakah diizinkan beroperasinya perusahaan
anjak piutang yang dimiliki oleh 100% pihak asing, akan dapat bermanfaat, khusus
yang berkaitan dengan masuknya investasi asing dan peningkatan ekspor.
¾ Walaupun data yang digunakan dengan tujuan yang berbeda, manfaat dari pelaporan
paralel (pengumpulan dan pemprosesan data oleh Bank Indonesia dan Menteri
Keuangan), secara keseluruhan tetap tidak jelas. Supaya merampingkan dan
menyempurnakan prosedur, peninjauan kembali direkomendasikan dilaksanakan
amat segera dengan demikian satu institusi menggabungkan data dan kedua instansi
dapat mengakses data keseluruhan.
XII
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1 FACTORING IN INDONESIA
1.1 Background
Several instruments have been developed for entrepreneurs unable to finance their
companies the conventional way, namely either with equity, including retained profits, or
with loans, bank loans as well as those from other parties. Various products are available
to finance or "quasi"-finance assets of enterprises of different sizes, including SME, for
example, for
¾ financing (fixed) assets: leasing, venture capital
¾ financing production (current assets): trade loan and consignment
¾ financing marketing: sales or trade credit, factoring
The ADB Technical Assistance for the Development of SME identified that lack of
bankable collateral limits or even excludes SME form bank loans. Factoring may be one
solution to this problem.
The general public, the vast majority of SME, bank people and even managers working in
MFC are not familiar with the term factoring. This is, however, not characteristic for
Indonesia.1 Therefore, and because of its remarkable potential benefits for SME, the first
part of this report will explain features and types of factoring. There is no doubt that
factoring can overcome financial weaknesses of SME.2 The second part describes
regulations and recent developments in the Indonesian factoring market. Reference is
made to markets abroad. Due to financial restructuring, announcement of bankruptcy filing
(PT Indocitra Finance Tbk.), and other reasons, only few successful interviews with factors
were possible. Statistical data per end of 2000 were also not readily available. The third
part summarizes acute problems and weaknesses. Proposals are presented for
government actions to support factoring for the benefit of SME.
1.2 Definition
Factoring is an agreement to purchase accounts receivables (A/R) for the delivery of
goods and services for the purpose of financing. The factor buys the seller's A/R against
immediate cash despite some people using the term "factoring loan".
Factoring "bridge-finances" 80% to 90% of the invoice amount for the time from sending
the goods and the invoice, or receiving the delivery note signed by the buyer, until the
buyer settles the payment for these goods or services. The factoring client does not need
anymore to wait for money for his goods and services until the buyer settles the invoice.
Normally, collateral is not required.
It is not uncommon that companies settle their bills 45 days, 60 days or even much later,
after they received the goods. Buyers can process or trade these goods without using
their own funds or a credit facility. The seller is pre-financing the buyer's input and as such
1
In contrast to venture capital and leasing as alternative finance instruments, factoring did not receive mentioning when
discussing the financial aspects in "Policy Recommendation for SME Promotion in The Republic of Indonesia" (Shurijo
Urata, July 2000 as advisor to Coordinating Minister of Economy, Finance and Industry).
2
For a summary of advantages factoring offers, in particular to SME, see Annex 1.
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assumes, often not willingly, the role of a financial institution. Banks try to avoid financing
goods that have already been sold.
Figure 1:
The Mechanism of Factoring
1: delivery of goods
Factoring Client
Customer
2: delivery note
SELLER
Producer
BUYER
3 copy bill,
delivery note
4: $ initial
payment 80%
4
7: $
final
FACTOR
payment
Due date:
5
6: $ payment
8: with recourse
$ (money back if customer does not pay)
Factors offer two products that differ in principle3:
a) non-recourse or without recourse factoring
This is the genuine ("old-line") factoring. The factor assumes the full risk of bad debt.
The money remains with the client (producer) if the buyer does not pay. In developed
countries this risk cover is a main reason to co-operate with factors. For many years,
practically all factoring in Germany has used this form. Internationally, 60% of A/R is
bought without recourse.
b) with recourse factoring
The factor is allowed to return or re-sell the receivables to the client if the buyer does
not pay. This is the common factoring contract not only in Indonesia but also in several
other developing countries or new market economies in Eastern Europe (Poland,
Hungary, etc). The factor regards it difficult to calculate the risk, among others due to
lack of sufficient data on the buyer (missing track record), in particular in the absence
of a credit bureau. The producer chooses recourse factoring if he relies on his trade
partner. Or he regards the factor's risk margin high; fees would too much reduce his
profit. The factor's advantage is that he has two sources to recover his investment. In
Indonesia, client and customer are often companies of the same holding. Risks are not
diversified. But the factor does not receive a risk premium.
Factors finance also exports. Several factors established offices abroad or engaged in
joint ventures or strategic partnerships with foreign partners. Exporters can ship their
goods without using L/C procedures when they employ the services of a factor with
international connections. International factoring is a particular beneficial and suitable
instrument for SME if it concerns small shipments.
3
This report does not deal with other types of factoring like, e.g., in-house or bulk factoring.
2
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It is quite common that factors offer additional services to their clients:
¾ debtor bookkeeping
¾ supervision of payments
¾ sending reminders
¾ business analysis
¾ supervising the financial situation of buyers and warning the client if indicators
deteriorate
1.3 Purpose
Factoring is a choice when the producer or distributor does not only sell products or
services but offers also a trade loan, financial services, by allowing the buyer to settle the
bill up to 60 or even 90 days later. Some buyers, often big companies, even insist on this
trade loan as a prerequisite for transactions.
Three reasons for factoring are dominant:
¾ Sellers can offer pre-financing their shipments as a marketing instrument. Some
buyers prefer procuring goods from sources offering simultaneously financing, in
contrast to those offering the lowest price. Factoring assists when the seller does
not have sufficient funds and no credit line to provide a trade credit to the buyer, at
the same time, the buyer has not sufficient funds, or is not willing to immediately
pay for the goods and services.
¾ Non-recourse factoring frees the client from the risk that the buyer does not pay on
time or even at all. It would be too expensive or even impossible for the seller to
gather qualified information on the financial capacity and credit worthiness of the
buyer. This makes factoring attractive to SME with few, dominant buyers, a
considerable risk for any company.
¾ Regarding export factoring, the client has also sold (better: bought coverage
against) the foreign exchange risk and the country risk.
Many SME welcome that the factor takes over debtor bookkeeping, cash flow monitoring
and related administrative tasks. The factor is specialized and it would often not be
efficient for SME to employ additional staff.
SME feel weak and inferior when dealing with much larger enterprises. They feel being in
a stronger position when employing the services of a factor whom they deem more at level
with corporate companies.
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1.4 Regulations and Legal Aspects
1.4.1
Institutional Regulations
Presidential Decision No. 61/1988 on multifinance companies (Perusahaan Pembiayaan,
MFC) was the first regulating licensing and activities of MFC, namely leasing, factoring,
consumer finance, credit card companies, and venture capital firms.4 MFC can engage in
one or more of these activities.
The MoF Decree No 606/KMK.017/1995 was the first improvement of MFC regulations.
After the crisis, regulations in the finance sector have been improved again making them
more comprehensive and able to support developments in this sector. The present
regulation on MFC, MoF Decree No.448/KMK.017/2000 (October 2000), grew to become
51 paragraphs from 11 paragraphs before.
MFC are Indonesian or joint venture shareholder companies (Paragraph 8) or
cooperatives with not more than 85% foreign ownership (Par.14). MFC need to apply for a
license from MoF (Par.10). A decision has to be published 60 days later (Par.11). The
company has to start the business 60 days after receiving the license (Par.12).
To establish an MFC, minimum paid-up capital differs: (Par.13)
¾ national private company Rp 10 billion ($1 million)
¾ joint venture company
Rp 25 billion
¾ cooperative company
Rp 5 billion
Opening of branches requires again a license from the MoF. The plan has to be included
in the MFC's annual work plan and sanctioned by the General Shareholder Meeting. Only
profitable MFC are qualified. The decision on the application will be made latest after 30
days (Par.20).
MFC are allowed to borrow up to 15 times equity (net worth) out of which offshore loans
are limited to 5 times equity. For the sake of calculation, equity includes subordinated
loans with at least 5 years maturity that have been reported to the MoF latest 10 days
after they were received (Par.23). MFC are forbidden to mobilize funds directly from the
public or to issue promissory notes (except as a collateral for bank loans) (Par.27).
MFC have to report to MoF (copy to BI) the financial development monthly and activities
quarterly. The have to publish in a newspaper balance sheet and profit/loss calculation
latest four months after year-end (Par.30). MoF assisted by BI (Par.33) supervises MFC.
The license can be revoked if MFC do not comply with most of these regulations.
However, only administrative sanctions apply if MFC do not publish or submit their
financial report (Par.41).
It is important to know that MFC are not allowed to mobilize funds directly from the public,
be it in the form of giro accounts, savings, deposits or similar products.5 They also cannot
tap pension funds or the bond market. They are not allowed to issue promissory notes,
commercial papers (CP) or provide any kind of guarantee to other parties. Equity and
bank loans are their sources of finance. In contrast, the Indonesian Pawn Shop Company
4
The government issued special regulations on venture capital firms in 1995.
5
If the intention was to protect the public from losses than this rule has missed its objective. The public, through the
government recapitalizing banks, took indirectly over losses of MFC.
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(Perum Pegadaian), another source of alternative short-term finance, is allowed to offer
bonds, which obtained a high rating. For comparison, MFC in Thailand and in many other
countries are allowed to mobilize funds from the public. In Germany, factors applied even
for bank licenses.6 The Indonesian Law on Banks (No. 7/1992, amendment No. 10/1998)
does not allow banks to engage in factoring.
As a result of fictive transactions and cross funding, BI supervises MFC based on a joint
MoF/BI decree (No 607/KMK.017/1995 and No 28/9/KEP/GBI). In practice, factoring
companies do not feel supervised by BI nor could any recall being audited by BI as banks
are.
A technical guideline (Surat Edaran Nomor SE-1087/LK/1996) determines, among others,
how to classify factoring advances (see No. 4.2 Attachment II). Following this guideline,
with recourse factoring is never to be classified (doubtful or loss). The MoF also reviews
this loophole.
1.4.2
Legal Issues Regarding Factoring
Regulations on MFC do not refer in detail to factoring and the legal implications of the
transactions. This results in problems if factoring company client and customer differ on
contractual issues. In the absence of specific regulations court decisions are unpredictable
(see Annex 5).
Legally, the factor becomes the new creditor based on the seller's cession and sale of the
receivables. It is a purchase agreement, which, for the seller (client), has a financial
impact. It does not affect the buyer (or customer). Factoring is not a credit. Assignments of
A/R are recognized by the Indonesian law but there are no clear provisions governing their
use or rights. Consequently, it is difficult to determine if this security has been given
previously. At present, it is possible that a third person acquires “in good faith” A/R and
collects the money. The factor has to approach his client who by that time might be
already insolvent.7
Rules on selling A/R and cessions differ among nations. For example, in order to receive
preferred legal status, the American Law demands the notification of cessions to be
registered and accessible to the public, also to credit information bureaus. The Ottawa
Unidroit Convention8 on the acquisition of receivables for the purpose of financing and the
UNCILTRAL (United Nations Commission on International Trade Law) Convention shall
facilitate and ease international short-term financing, among others through regulations on
cessions of A/R. As a consequence of the Ottawa Convention, factoring will have
advantages against bank financing of receivables.
Indonesian factors are not aware of these conventions. Indonesia did not yet ratify or even
sign this convention.
6
At least 4 of 15 major factoring firms are banks.
7
See: eee.insolvencyasia.com/insolvency_law_regimes/Indonesia/section_c.html p 4, and 7
8
Unidroit = International Institute for the Unification of Private Law.
In 1988, representatives from 50 nations convened in Ottawa and decided on the "Unidroit Convention on International
Factoring". Among these nations were leading industrialized countries (UK, Italy, USA, Germany) but also developing
countries like Nigeria, Guinea etc.
For more details see http:www.unidroit.org/english/implement/I-88-f.html (24/10/01).
5
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2 FACTORING PRACTICE IN INDONESIA
2.1 From Past to Presence
Archeologists found documents that about 5000 years ago merchants already practiced
factoring in today's Iraq. Factoring as it is now known in the world of finance origins from
Chicago, USA, where Heller Bank started factoring in 1919. Today, this factor claims to be
the biggest worldwide. In Germany, the first factor started in 19589. Formal factoring
offered by a finance company is also relatively new in Indonesia.10 Regulated factoring
started 1988 with the decree on multifinance companies (MFC). The first factoring
company, PT Niaga International Factoring (NIF) commenced business in November
1990. Until end of 1995, a total of 245 MFC obtained licenses allowing these companies to
be active in any of the five forms of alternative financing. The following years, until 2000,
no new MFC licenses were issued. The market was considered saturated. Some
companies intercepted 1996, probably using licenses obtained earlier.11 In 2001, three
MFC applied for a license and two of them received it until October.
Few MFC ever offered their services to the general public. Most of these enterprises were
established to fund the particular interests of conglomerates and businesses of owners of
these MFC. It is evident that, with bank regulations becoming stricter, activities of factoring
companies ballooned.12 Reportedly, about 80% of the transactions recorded as factoring
were not backed up by trade transactions. They were "fictive" or constituted "double
financing". They served to un-collateralize lending to enterprises, de-linking from capital
ratio requirements, and avoiding supervision by authorities. Although MFC as financial
institutions have to report to BI, they have not access to BI's credit information system.
Therefore, double financing could remain undetected. The MFC also allowed
circumventing the banks' legal lending limits. It is no wonder that the entire industry
crashed when the financial crisis hit Indonesia. However, for most of the MFC, in particular
factoring companies, the crisis is deeper and it lasts much longer. The government did not
develop a rescue package to bail out MFC. One reason mentioned is that no public funds
are directly involved in financing MFC.13
Per 22 March 2001, IBRA (Indonesian Banking Restructuring Agency, BPPN) supervised
118 MFC.14 One should mention that not all MFC are culprits and that some of them are
victims. Until June 2001, only 107 companies released financial figures for 2000. 35
multifinance companies report factoring activities, 20 of them turn over less than Rp 5
billion. Only two companies are known to be engaged in offering factoring to the public.
Unlike other MFC products, factoring did not yet pick up after the 1998 peak of the crisis.
Until now, factoring was not very much promoted. It has not gained popularity in Indonesia
or among SME as - seen apart from some exceptions - factors were not focusing SME.
9
Still some years before in 1962 the first leasing company was established in Germany!
10
See also: Cash Management in Indonesia by W. Adji Wibowo, Head of Cash Management, Deutsche Bank Jakarta, in:
Treasury Management International, Special Report, p 8 f.
11
For example, PT Sinar Mas Multifinance, a wholly owned subsidiary company of Sinar Mas Multiartha, was established in
1996 "with Leasing and Factoring as its core business." Source: http://www.sinarmas.com/annual_99_8.htm dated 03 Oct. 2001.
12
See: Annex on Sinar Mas Multifinance.
13
This argument is, in the Indonesian context, not completely right. MFC cannot repay bank loans origining from deposits.
Banks cannot return deposits and are therefore assisted by the public through a blanket stae guarantee and recapitalization.
14
http://ibra.bppn.go.id/indonesia/loan_restructuring/FinInst.asp.
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Out of 482 SME that were interviewed in Medan and Semarang in May/June 2001 only
one ever used the services of a factoring company.15 In fact, most of them would not know
what factoring is all about. The term and its meaning remain widely unknown, even to
bank people.
2.2 Financial Development of Factoring Companies
Between 1992 and 1995, MFC experienced the sharpest growth in factoring with tripledigit annual average growth. In 1996, factoring declined, most probably due to regulations
limiting lending. One year later, factoring increased 25%. Data Consult wrote: "Factoring
investments grew amazingly."
The development of factoring portfolios shows a deep decline following the financial crisis.
According to data published by BI16 and those obtained from the MoF, the quality of the
factoring portfolio is worst if compared to other multifinance products like leasing,
consumer finance, or credit cards.
Figure 2:
Development of Factoring Portfolio
Rp billion
Year
1996 1997 1998 1999 10/2000 12/2000 06/2001
Reporting MFC
230
232
N/A.
N/A.
N/A.
183
201
Pass
8,00
9,76
5.37
2.32
1.51
2,80
1,01
Doubtful
0,02
0,19
0.45
0.33
0.22
0,28
0,24
Loss
0,02
0,15
2.18
3.74
3.57
3,48
2,78
Total
8.03
10.10
7.99
6.40
5.30
6,55
4.03
Source: Bank Indonesia, Annual Report, Ministry of Finance
Remark: Several MFC do not send their reports to MoF regularly!
The figures show a decline in factoring advances. If converted to $, the factoring market
receded 85% from $3.3 billion to $400 million. Compared with the total multifinance
investment the factoring share declined from 30% (1996) to 13%. The outstanding amount
of active factoring (pass) compares to about 0.4% of total bank loans (Rp 258 trillion).
The figures need to be interpreted. According to several sources, the amount of
unrecoverable factoring receivables results from malpractice among conglomerates, a
cooperation between suppliers, buyers, banks and MFC.
The business volume of factoring, the amount of A/R purchased, is normally much higher
than the outstanding amount. It depends on the average time until a customer pays or
until the money can be "turned over". If one relates Rp 2.6 trillion factoring volume (year
2000) to Rp 1 trillion outstanding, this takes about 360/2.6 = 140 days or nearly 5 months.
15
The company's characteristcs are: operating in the service sector in Semarang, number of
employees between 5 and 19 (small), existing since more than 10 years, never received a bank
loan, it reported growth during the past two years. Source: ADB TA SME Development, ACNielsen,
Jakarta, Study of Small Medium Enterprise In Semarang and Medan, June 2001.
16
Bank Indonesia, Laporan Tahunan (Annual Report) 2000, p. 123.
7
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SME DEVELOPMENTTA
This is in line with reports that Indonesian factors receive payments only after about three
to six months. For comparison, German customers pay within 40 to 50 days only.
It is assumed that most of the Rp 1.0 trillion outstanding and classified as "pass" does not
concern factoring of goods and services actually delivered during the past six months. In
fact, regulations provide a loophole for "with recourse factoring". These advances need
not to be classified as doubtful or loss at all.
It is estimated that certainly less than Rp 300 billion outstanding, equivalent to 0.1% of
total bank lending is based on actual factoring. The factoring volume would not exceed Rp
1 trillion. For comparison, German factors report receivables amounting to Euro 3 to 4
billion against bank loans amounting to Euro 3,600 billion, a similar small ratio!
Development of Factoring Investment
Figure 3:
Rp trillion
12.00
10.00
8.00
6.00
Loss
Doubtful
Pass
4.00
2.00
10
/2
00
0
12
/2
00
0
06
/2
00
1
19
99
19
98
19
97
19
96
0.00
Factoring is a tiny niche product among financial instruments, in particular concerning
support to SME. At present, the conclusion of a new factoring contract is a rarity. The
market still shrinks as long as banks insist on repayment of loans to MFC and consumer
finance offers safer incomes.
Multifinance Portfolio Quality
Figure 4:
Consumer finance promises highest repayment ratios
100.0%
90.0%
80.0%
70.0%
60.0%
50.0%
40.0%
30.0%
20.0%
10.0%
0.0%
Leasing
Factoring
Credit Card
00
1
/2
06
00
0
/2
12
00
0
/2
10
99
19
98
19
97
19
19
96
Cons. Finance
8
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2.3 Factors in Indonesia
Factoring is, and may have been, the dominant activity of several MFC, but not the only
one. There is no MFC in Indonesia anymore offering exclusively factoring since PT Niaga
International Factoring (NIF) merged with its sister company Niaga Leasing recently.
Factoring is a market dominated by national enterprises, for example:
-
PT Sinar Mas Multifinance claimed to be the biggest factor with a portfolio exceeding
Rp 1 trillion in 1996.
-
Indonesian conglomerates founded several multifinance companies, for example PT
Indomobil owns and co-owns a number of MFC, and four of them are licensed to
engage in factoring.
-
Joint ventures finance only about 5% of factoring activities, in contrast to leasing
(60%).
-
Only three enterprises are affiliated to international factoring chains. Even ORIX, a
Japanese MFC operating in more than 20 countries, is engaged in factoring, e.g., in
Sri Lanka, but not in Indonesia through its PT Orix Indonesia Finance joint venture.
The international affiliation allows engaging in international export and importing
factoring, and offers access to experience and training facilities.
Figure 5:
International Affiliation of Factoring Companies
Name of company
National affiliation
Niaga
International
Factors, Bank Niaga
(NIF), a joint venture with IFS –Intern.
Factors Singapore Ltd.
International affiliation
Heller Factoring
Status
active
BII Finance Center (BIIFC)17
Bank
International FCI
(Factors Chain International)
Indonesia (BII)
active
Salindo Perdana Finance
Salim Group
closed
FCI
PT BII Finance Center is besides NIF the only other often-mentioned serious supplier of
factoring services to SME. No figures were obtained, but it was mentioned that advances
of less than Rp 30 million were managed. Meanwhile, it was felt necessary to diversify. No
funds could be obtained for the factoring market. Both firms entered the profitable
consumer finance segment, lately a booming, profitable and more promising sector thanks
to increasing demand for motor vehicles.
NIF handles a factoring volume that amounted to Rp 73 billion in 2000 and achieved Rp
110 billion by end of September 2001. It is expected to even grow to Rp 200 billion in the
last quarter.18 The factoring volume of BIIFC amounts probably to between Rp 50 and Rp
100 billion. Provided that the average maturity is about three months or more, the average
amount lent (outstanding) by these two companies is Rp 60 to 80 billion.19 They could
17
The wholly-owned subsidiary was formed on February 13, 1991, as a multi-finance services company to engage in
leasing, factoring and venture capital. It is also licenced to provide credit-card services and consumer finance.
18
According to Parman Nataatmadja, director of Niaga International Factors, the company has already achieved a volume
of Rp 110 billion until end of September, Bisnis Indonesia, 29 Sept. 2001: "NIF targetkan leasing Rp 130 miliar".
19
Rp 250 billion loans (volume) x 90 days average turnover (maturity) period / 360 days per year = average outstanding of
Rp 62.5 billion.
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immediately increase financing, also to SME, if they could obtain more funds. The
liability/equity ratio of far below 15 would allow this (see table below).
Six MFC are listed on the Jakarta Stock Exchange. Four of them engaged in factoring.
Few figures could be gathered20 on these and two other Indonesian firms offering
factoring. The four publicly listed companies responded that their enterprises undergo
"internal discussions" about their future. As mentioned above, the doubts that any of the
loss-making listed companies is involved in substantial financing of trade receivables
seem to be confirmed. At present, they are not offering factoring to the general public.
Activities are limited to "maintenance" of clients, i.e., recovery, prolongation and
restructuring of bad A/R as well as negotiating with creditors.
Figure 6:
Multifinance Companies Engaged in Factoring
Per December 2000
Rp billion
Assets
Leasing Factoring Consum. Liabilities
Finance
Equity
Profit
(Loss)
Public Companies
BBL Dharmala Finance21
871.4
313.0
Indocitra Finance
67.1
1.7
Manly Unitama Finance
98.4
Panca Overseas Finance22
908.6
35.1
15.2
114.0
63.0
69.9
11.5
559.0
0.0
1,158.5 (287.1)
(202.7)
47.3
19.8
(3.5)
33.2
57.7
(6.2)
1,019.8 (111.2)
(46.9)
Other Companies involved in factoring
BII Finance Center (BIIFC)
103.5
data not available
Niaga International Factors
34.4
data not available
Source: InfoBank, Biro Riset, Edition June 2001 p 63 ff. and p.72ff.
95.2
8.3
2.1
12.9
7.1
(3.9)
In contrast to leasing firms, factoring companies did never set up their own association.
They are members of the Asosiasi Perusahaan Pembiayaan Indonesia (APPI), the MFC
association that integrated ALI (Asosiasi Leasing Indonesia) in April 2000.
20
Biro Riset InfoBank, published figures.
21
This company has recorded the highest loss of 107 MFC presented in a recent comparison. At the end of 2000, the equity
of 40 out of 107 MFC included in this survey does not anymore reach Rp 10 billion. 20 MFC record negative equity. About
100 other MFC did not publish their balance sheet on time, supposedly, because figures are even worse. For details see
InfoBank, Special Issue No. 262, June 2001.
22
The Jakarta Stock Exchange has fined PT Panca Overseas Finance for not reporting, e.g. Rp 141 million ($14,100) in
March 2001, and later again Rp 10 million ($1,000) for failing to submit the first half financial report to the bourse (Jakarta
Post, 12 October 2001.
10
ADB
Figure 7:
SME DEVELOPMENTTA
Investments in Multifinance Companies
J o in t V e n tu r e s
P r iv a te N a tio n a l
1 2 .0 0
Rp trillion / $ billion/10
1 0 .0 0
8 .0 0
L e a s in g
F a c to r in g
C u s to m e r F .
C r e d it C a r d
6 .0 0
4 .0 0
S o u rc e :
In fo b a n k
0 4 /2 0 0 1
2 .0 0
*) J u n e
1997
2 0 0 0 *)
1997
2 0 0 0 *)
It is remarkable that joint venture companies financed factoring in Indonesia with Rp
333.4 billion only compared to Rp 5,784 billion made available by national companies. If
compared with 1997, the ratio did not change considerably during the post-crisis years.
Factoring firms are dominantly private national enterprises.
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2.4 Location
All of the 35 active factors are domiciled in Jakarta. BIIFC and NIF offer factoring only to
enterprises within the area of and around Jakarta (Jabotabek). Transaction costs would be
too high for financing enterprises outside this area. Formerly, factoring companies
domiciled in Jakarta offered factoring to enterprises in Surabaya, Bandung and Semarang
through representatives and branches.
The Indonesian Yellow Pages on Internet lists 13 MFC, with eight located in Jakarta.
Those listed at other locations, three in Semarang and one each in Balikpapan and
Bandung, are branches of Jakarta based companies. Only one of these, NIF is engaged in
factoring.
2.5 Source of Finance
MFC are funded with equity and bank loans. The following table depicts sources of
finance. It is an aggregated picture of all MFC.
Figure 8:
Source of Finance for MFC
Rp billion
Year 12/1997
06/2000
Joint ventures
Equity
12/1997 06/2000
Domestic MFC
2,062
750
5,396
(1,258)
128
(1,486)
187
(4,871)
Bank loans
13,814
6,721
20,824
11,656
Other loans
960
2,426
1,765
2,859
Profit (Loss) end 1996/1999
The crisis hit all companies and especially those receiving finance from abroad. With the
Rupiah losing value, foreign exchange liabilities increased and eventually exceeded
assets. The crisis interrupted the cash flow. Even cautious MFC became illiquid.
Lack of access to funds is perhaps the most crucial problem MFC are facing:
-
Banks are still extremely reluctant to finance MFC as a result of the past traumatic
experience with a huge portfolio of non-performing loans.
-
Formerly, factors secured the loans with their assets, namely A/R against creditworthy
buyers. Many banks regard this type of collateral to be not anymore sufficient or
secure. At the same time Bank Indonesia severed collateral requirements for bank
loans.
-
Foreign investors are still hesitant to extend new loans to factoring companies in
Indonesia.
-
Despite regarding the prospects for their Indonesian associate "not so great yet"23, IFS
increased its share in NIF from 40% to 47% in 2000.
23
see: http://asiaonemarkets.com/matrix/wallstraits/microcap/microcap_ifs.html, 03 Oct 2001.
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2.6 Service of Factors
Seen apart from the fact that factors in Indonesia normally do not take over the risk of
non-payment (with-recourse factoring only) one might mention one particular feature that
is characteristic for the SME situation in Indonesia. The factors have to advice many of
their SME clients in administration and bookkeeping, in particular handling of A/R,
invoicing etc. They also perform audits so that they regard financing otherwise nonbankable clients being responsible.
Outsourcing of administrative tasks like bookkeeping is not yet popular among Indonesian
SME.
2.7 Cost of Factoring
The convenience of factoring is paid with a discount on the invoice's face value. It is
higher if compared to the interest equivalent of a bank loan. However, with accelerated
cash flow the factor's clients can increase sales and profits. Normally, these additional
profits exceed the higher costs of factoring. For a cost comparison between a bank loan
and factoring see Annex 2.
The discount, mostly a fee and interest, depends on:
¾ the credit worthiness of seller (client) and buyer (customer)
¾ the time it takes until the bills are settled (factors keep current accounts with their
clients)
¾ prevailing bank interest rates for non-collateralized loans
¾ average invoice amount (international standards applied, it should not be less than
$500)
The discount, if compared to a bank loan, translates to a 40% to 60% p.a. interest rate. It
is no wonder that factoring is a profitable business as PBT (Profit Before Tax) margins of
IFS, Singapore, demonstrate:
Figure 9:
Profitability of Factoring in SE Asia: International Factors Singapore (IFS)
Year
PBT margin
1995
1996
1997
1998
1999
27.9%
28.2%
16.0%
-11.1%
24.7%
Source: http://asiaonemarkets.com/egi-bin/utils/printf.pl?almktipowatch, 03 Oct 2001.
International factoring is said to be more expensive if compared to a bank loan insured by
an export credit insurer like Asuransi Ekspor Indonesia (ASEI).
2.8 Clients of Factor
According to textbooks factoring is suitable for small businesses with a weak capital
foundation and limited bankable collateral but excellent market prospects in a dynamic,
growing market in the fields of manufacturing, distribution and services that generally sell
on credit, in particular when dealing with big companies.
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In Indonesia, SME with low technology and changing market conditions have found
access to factoring. They have to finance delivery of goods and services if they want to
sell them to large enterprises. Large enterprises seek pre-financing from SME!
Figure 10: Typical Factoring Clients and Customers
Client
Customer
handicrafts manufacturer
department stores, exporters
furniture manufacturer
wholesaler, exporters
transport service providers
mining companies
food processor
Supermarkets
Scavengers
pulp and paper factories
Detailed data could not be obtained. For example, in 1998, German factoring clients were
wholesale enterprises (46%), industry and manufacturing (40%), and services (14%).
In general, factors regard many of their clients qualifying as SME (less than 100
employees). Often the client's enterprise is smaller than the buyer's is. Not all factors
accept clients as individuals, but statistical evidence shows that they constitute the
majority (see Annex 6). The factor relies heavily on the name and reputation of the
customer (buyer) assumed to be identical with its credit worthiness. All customers are
incorporated enterprises (CV, PT). In fact, the customer list includes well-known large
national and international companies.
Based on experience, factoring with one client already starts to become profitable with
annual volumes as small as Rp 50 million. This underlines the fact that factoring is a
suitable alternative also for small and medium enterprises.
Reportedly, some enterprises, characterized as medium-sized family-managed entities,
did not allow their suppliers to use factors. They fear negative effects, be it that the factor
could obtain business data, impacts on credit lines with the bank the factor is affiliated to,
or only that they believe settling payment delay problems directly with the supplier being
easier.
2.9 Marketing Efforts
The requests of applicants for factoring services exceed by far the financial capacity of the
active factoring firms. Therefore, factors do not need to undertake any marketing efforts.
On the other hand, factoring does not become a well-known facility.
The alliance of NIF with IFS allows participating in SE Asia's first online factoring services.
This can be regarded as a marketing effort. However, it is questioned whether Indonesian
SME exporters can benefit from this facility soon.
2.10 Market Prospects and Potential
The "real" Indonesian factoring market is far from being saturated. The companies
interviewed see a huge immediate and medium-term market potential. It cannot be
realized, simply due to lack of funds.
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The director of a factoring company presented the potential size of the Indonesian market
for export factoring as follows. For example, financing 1% of non-oil/gas exports alone
would result in a monthly volume of more than Rp 60 billion ($6 million).24 However, one
firm claims that the realized local export financing does not exceed $50,000 to $100,000
per month. Requests to increase factoring facilities have to be turned down because
banks do not extend new loans to factoring companies. The Singapore partner of an
Indonesian factoring firm also expressed still wariness regarding injection of additional
funds.
The director of another firm engaged in factoring claims that he could easily finance an
additional volume of Rp 5 billion monthly but banks do not make available funds, because
"they do not comprehend the MFC business."
As mentioned before, few factors operate outside Jakarta and its vicinity. However, they
confirm a potential to sell factoring also in other cities. One factor agreed that he would not
need a feasibility study to start immediately a profitable branch in, for example, Semarang.
However he needs the study for the application of a license to open a branch.25
Factoring is still widely performed outside the formal sector. Moneylenders are advancing
funds to sellers from whom they receive post-dated cheques, "bon putih", or, preferably,
"bilyet giro" against immediate cash against a discount.26 This paper is accepted as
collateral and the "discounter" can hand it to another financier should he urgently need
money. The size of this market is quite difficult to assess. For example, the market for
cloths and garment in Tanah Abang, Jakarta, alone would easily take up some Rp 10
billion.
In the absence of other data, some assumptions are made on which a projection for the
near-future volume for SME factoring is based:
¾ About 70,000 enterprises in Indonesia qualify as medium-sized enterprises with a
workforce of between 20 and 99 employees.
¾ Assuming that perhaps 5% or some 3,500 enterprises, the upper-end medium-sized
enterprises, are suitable candidates for factoring and
¾ their average monthly factoring turnover would amount to Rp 100 million,
¾ their buyers settle the invoices within two to four months
¾ the financing required by factors (permanent outstanding amount) could amount to
some 3,500 enterprises x Rp 100 million x 2 - 4 months =
Rp 700 billion to Rp 1,400 billion ($70 - $140 million).
This is in line with projections of practitioners estimating a market potential for SME
factoring amounting to about Rp 1 trillion within three to five years.
24
January 2001 non-oil/gas exports amounted to US$ 637 million, 1% is equivalent to about Rp 60 billion.
25
See MoF Decree 448, Paragraph 20.
26
The issuer of a "bilyet giro" orders his bank to charge his account in favour of the account of the person and account
mentioned in the "bilyet giro" at the date mentioned in this paper.
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2.11 International Factoring
Factoring is offered in 54 countries by 986 companies.27 Each country keeps records on
factoring in a different way and the blending of information is said to be almost impossible.
It seems however that factoring is more popular in some countries whereas it is less in
others. Differences are apparent among European countries and also among Asian
countries.
Figure 11: Factoring Turnover (volume) for Year 2000
Million Euro (or approximately million $)
Country
#
National International
Total
United Kingdom
70
117,700
6,070
123,770
Germany
15
18,660
4,823
23,483
7
11,500
4,400
15,900
Thailand
16
1,260
8
1,268
Malaysia
12
570
15
585
Indonesia
2
+20?
3
23
Netherlands
Indonesia (MoF)
40?
+260?
Indonesia (MoF)
Jan-Juni 2001
35
+72?
# Number of leading factoring companies included in an international
survey by factors.com (figures in italics are own estimates).
Factoring is not a matured market, even in industrialized countries. The worldwide
factoring volume increased 1999 by more than 20% and 2000 again by about 12%. For
example, factors in Germany saw their market grow from DM 19.1 billion in 1993 to DM
46.0 billion (Euro 23.5 billion) in 2000 or more than 13% compounded annually over an 8year period.
International factoring records highest growth rates, namely 40% in 2000, but compared
with the total volume, about $600 billion, it accounts for only 7%. Strategic alliances and
cooperation among factors as well as on-line factoring offer services in particular for
exporters. The factor takes over the risk of non-payment, currency fluctuations, and
country risk. SME, often just producing and relying on a relationship between an export
company and its counterpart abroad, can directly ship their goods to their final destination.
Factoring allows to save trade margins and to increase the client's price-competitiveness.
Factors Chain International (FCI), an Amsterdam based entity, has 144 members in 51
countries. They claim to cover 47% of the factoring world market. Their members serve
111,000 clients and collect payments from 5,800,000 customers. The member’s process
more than 100 million invoices. Typical sectors served by FCI members include: textiles,
wood and furniture, food and beverages, metalworking, plastic industries, paper, and
machinery.
FCI offers training through correspondence courses. Seminars are held in many regions in
the world, including South East Asia (Singapore).
In Germany, the factoring association counts 15 members. A typical factoring company
employs about 100 persons, processes 1 million invoices annually and achieves a
turnover (financing value) of $2.5 billion (average $2,500 per invoice). The average
turnover period is 40 to 50 days (national 30-40 days, international 60-90 days) resulting
27
Deutsche Factoring Bank AG, Annual Report 2000.
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in a financing/outstanding ratio of 8 to 9. About 20% of the business concerns international
factoring. Several factoring companies applied for a bank license allowing them to access
cheaper funds.
The biggest factor is DG Diskontbank (market share about 25%), which has its roots in the
cooperative banking sector. Heller Bank, a subsidiary of the US based founder of modern
factoring, comes second (15%).
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3 CONCLUSIONS AND RECOMMENDATIONS
Factoring is an instrument that can assist profitable, but financially still weak, SME to
compete with financially stronger firms. It offers an attractive alternative if access to bank
credits is restricted, among others due to lack of bankable collateral. The market potential
is remarkable and easy to satisfy. However, factors in Indonesia depend heavily on local
bank credits. Banks are reluctant to finance factoring companies due to past
delinquencies. Factoring companies cannot support SME at times when bank loans are
limited in general, and especially for MFC. In addition, consumer finance offers also a
lucrative but much a safer market. The removal of problems faced by MFC engaged in
factoring will benefit SME.
3.1 Problems
MFC cannot get funds for factoring:
¾ In general, demand for bank loans exceeds supply.
¾ Banks are reluctant to finance MFC because of past delinquencies provoked by
mismanagement due to vested interests without considering that many MFC
became victims themselves.
¾ Banks do not differentiate very much between MFC and their fields of activity.
Some consider factoring companies as unfair competitors as they must not follow
strict banking regulations.
¾ Several government regulations are not supportive. The quality classification of
A/R gives few clues on the soundness of an MFC practicing the common withrecourse factoring. With few exceptions, bank loans are the only source of funds
from third parties available to MFC.
¾ IBRA has not yet resolved severe problems of several prominent MFC thus
contributing to reluctance to finance similar enterprises with equity.
¾ Some fear that an agency supervising financial services firms (LPJK, Lembaga
Pengawasan Jasa Keuangan) might result in more administration and
bureaucracy.
¾ A credit bureau system providing a track record with data about prospective clients
is badly missing.
3.2 Requests
MFC cannot get funds for factoring: MFC request for government actions. They consider
the following matters to be urgent:
1. Complaints are expressed that government institutions like courts, judges, and police
are not well informed about IBRA and the institution's objectives. Too often they side
with debtors. This delays the clean up of defunct companies and the recovery of a
more stable MF industry.
2. Healthy factoring companies need financial support, i.e., access to funds. This access
has a higher priority than preferential interest rates.
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3. At present, bank loans and equity are the only source to fund multifinance companies.
Rules should allow that MFC would be given access to other sources of finance, e.g.,
pension funds or investments from foundations, etc.
4. The tax regulation should not treat leasing, factoring, and consumer finance differently.
For example, the tax directorate accepts only 2.5% provision for bad debt of leasing
companies as they are regarded being finance companies in contrast to factoring and
consumer finance activities.
3.3 Recommendations and Suggested Actions
Insufficient access to funds for factors is the most important single limiting factor.
Recommendations concern access to funds through measures aimed at increasing the
banks' confidence, not in the entire factoring industry but at least in individual companies
with superior governance. There should be a reward for better management. In addition
several minor other proposals will be presented.
3.3.1 Access to Funds
Not all factoring practicing MFC played foul but banks had good reason losing trust in this
line of business. It is proposed to offer a platform for MFC engaged in factoring to expose
their ability to serve SME. Not all factoring companies should be treated the same way.
The tap of funds should only be opened for MFC that follow several transparency and
good governance criteria. Not all MFC might like to follow this line. Therefore, it is justified
if access to funds is only improved for superior companies.
It is proposed that interested MFC are given the opportunity to upgrade or qualify to
become a specialized factoring company adhering to strict regulations on one hand and,
in turn, allowing broader access to funds on the other hand.
¾ It is proposed that the government should issue a special decree governing singlepurpose factoring companies and their activities. (A similar decree has already
been issued for venture capital companies.) The regulations should incorporate
lessons learned from the crisis and experience from the banking sector, e.g.,
concerning issues like improved rules on portfolio quality calculation, maximum
exposure to individual clients and customers, adherence to healthy financial ratios,
responsibilities of management and commissioners, etc.
¾ Special guidelines for assessing factoring companies should be developed
permitting risk rating of the institution. It is assumed that rating increases
competition among MFC in order to qualify for a bank loan. It is suggested to
improve the flexibility of MFC to respond to market demands through reviewing
procedures required for opening branch offices.
¾ Regulations for calculating the soundness of factory firms should be developed
following the blueprint and rules applicable for banks.
¾ Rules for supervision, e.g., by LPJK (Lembaga Pengawasan Jasa Keuangan), the
future agency supervising financial institutions, for reporting requirements, and
actions stipulating compulsory recapitalization or immediate closure should be put
in place, enforced and practiced. (The MoF is already working on this.)
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¾ In turn, risk rated single-purpose factoring companies should be allowed to
compete for funds from insurance companies, foundations, pension funds and
from private investors, be it in the form of equity or as liability like issuing
commercial paper (CP) (for which, however, in contrast to banks, the government
should expressively not take over any guarantee!).
¾ Rated factoring companies should be given access to funds earmarked for
developing SME, for example those funds that are offered by a specialized
second-tier bank (a wholesale financial institution, a proposal of the ADB-TA SME
Development), with the objective to support SME. A special window should be
made available to allow factors to prove profitable and sustainable business
relationships with SME, which may attract more funds.
¾ A regulation demanding that only banks can become clients of Bank Export
Indonesia (BEI) should be reviewed in favor of rated factors financing SME
exports.
3.3.2 Other Recommendations to Enhance SME Financing
The following are recommendations to support factors aimed at reducing risk enhance
supply of factoring services, and improve monitoring:
1. Factoring companies (and other MFC) should be allowed immediately access to and
participation in the BI-run credit information system, a step requested by factors and
banks as well. This will reduce the risk of banks and factors when extending loans.
Double financing can be detected and avoided.
2. The government should review regulations on legal issues: (i) It would be helpful in the
development of lending on security of various types of property, including A/R, if also
the rules pertaining to A/R were codified and if a security registration system was put
in place to record such security interests as a means of perfection of security interests
in these types of assets.28 (ii) Based on recommendations laid down in the Ottawa
Convention and UNCITRAL (United Nations Commission on International Trade Law)
convention on international factoring aiming at supporting export the government
should implement a system that record other than immovable assets.
3. It is suggested to review whether allowing a 100% foreign factoring company
ownership could be beneficial, in particular with regard to gaining foreign investment
and enhancing exports.
Although the data are used for different purposes, the advantages of parallel reporting to
and data collecting and processing by BI and MoF remain entirely unclear. In order to
streamline and improve government procedures, a review is urgently recommended so
that one institution gathers the data and both have access to these data.
It is expected that data on activities of multifinance companies are available latest two
months after the reporting period ended instead of more than ten months at present.
28
See also: www.InsolvencyAsia.com/insolvency_law_regimes/indonesia/sectio_c.html
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List of Annexes
Annex 1
Advantages of Factoring for SME
Annex 2
Income and Cost Comparison (Example)
Annex 3
PT Niaga International Factors, A Company Profile
Conglomerates: The Indomobil Group
Annex 4
PT Sinar Mas Multifinance (SMM), Full Service Multi Finance
Annex 5
Legal Problems
Annex 6
Statistical Data on Financial Institutions
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ANNEX 1
Advantages of Factoring for SME
Factors or factoring companies are multifinance corporations offering their services to
producers or suppliers who have typically to wait between 30 to 90 days, in some cases
even longer, until the buyer settles the debt. The seller or has several advantages when
becoming a client and using the services of a factor:
-
Assets of the company are not fixed in A/R or loans to buyers, which is not the
objective of the enterprise.
-
The factor buys A/R; there is no need for any physical collateral.
-
Increased liquidity increases the sellers' standing and credit worthiness
-
Immediate replenishment of goods increases and accelerates turnover resulting in
business expansion and allowing higher capacity use resulting from higher efficiency
due to lower idle capacity of fixed assets.
-
Inputs are cheaper thanks to cash discounts and/or bulk purchases.
-
Outsourcing of non-essential tasks to specialists, like approving accounts,
administration of A/R, and reminding slow paying customers, increases efficiency.
Overhead costs can be reduced.
-
A weak seller is less psychologically burdened in his negotiations. He avoids direct
confrontation with buyers regarding follow-up of settlements of bills.
-
Credit insurance against bad debt is possible.
-
The factor is constantly watching the financial capacity of the buyer and warns in time
against "risky" transactions or if the buyer's situation deteriorates.
-
Factoring companies are specialized in handling bad debt thus reducing the amount
of necessary write-offs.
-
Factoring is a fast and adaptable instrument that allows to flexibly benefiting from
short-term opportunities without waiting for a bank's credit decision and timeconsuming collateralization.
-
No additional debt or loan burdens the balance sheet and the company's financial
ratios, and subsequently the credit worthiness or credit rating, is improved.
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ANNEX 2
Income and Cost Comparison (Example)
The comparison is based on assuming a $1,000 shipment on, for example, 1 August for
the alternatives with bank financing or with factoring.
Activity
Bank loan
Goods
shipped,
and invoice send on
Factoring
1 August
1 August
-
$800 initial cash payment
Payment:
2 August, transfer
(advance from factor)
Interest charge 1.5% p.m.
2 months x $1,000 x 1.5%
($ 6) = $200 x 1.5% p.m. x 2 months
($ 30)
interest (bank finance is required)
Interest earned
$16 = $800 x 1% p.m. x 2 months
(in case no bank credit is
required)
Debt
collection
supervision
of
reminders
1 October,
the amount is the advance from
the factor and may be deposited
efforts,
A/R,
($ 10)
from
factor
from buyer
$1,000
Net transaction income
./.
$
$ 960
task and expenses of factor are
deducted from final payment
157
$ 951
balance deducted by the factor's
fee*) after the buyer (customer)
has settled the bill
Difference $9 or 1%
*) The $43 discount is the factor's gross income and reduces the producer's income, e.g.:
- interest for 2 months x $800 x 1.75% p.m.
= $28
- plus fee 1.5% x $1,000
= $15
Commonly, the discount is based on the following particulars:
-
A handling fee is charged amounting to 0.5% to 2.0% of the invoice value to
compensate the factor's cost for administration. For small invoice amounts (below
$1,000), the handling fee percentage will be high.
-
The factor charges interest at a rate similar to the prevailing interest rate for
uncollateralized commercial credits. Therefore, the nominal interest rate can be higher
if compared to interest charged for collateralized credit (see example above: 1.75%
versus 1.5% p.m.)
-
In case of non-recourse factoring (100% risk cover) risk premiums of between 1% to
5% would be deducted depending on the credit worthiness of the buyer.
Some factors charge fees for assessing the credit worthiness of new buyers amounting to
$10 to 30 per investigation.
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ANNEX 3a
A Company Profile
PT Niaga International Factors
Gedung Bank Niaga Gajah Mada, Lt. 3
Jl. Gajah Mada No. 18
Jakarta 10130
Tel: 021-7398617
PT. Niaga International Factoring (NIF) was the first multifinance company (MFC) founded
after the 1988 decree on MFC with factoring as the only activity. It is a subsidiary
company of PT Bank Niaga, a bank founded already in 1955.
The company started its business in November 1990 as the first of its kind in Indonesia.
PT Niaga International Factoring (NIF) is a joint venture between
- 60%
- 40%
PT Bank Niaga29 and
International Factors (Singapore) Ltd. (IFS) with 40% equity.
In 2000, IFS increased the share to 47% in order to comply with equity regulations.
However the company still misses the Rp 25 billion capital requirement for joint ventures.
NIF is the only Indonesian Member of International Factors Group s.c.ifgroup with more
than 50 members in nearly 40 countries
The performance of the company was greatly affected by the scarcity of funding sources
for the multi-finance industry. It called for an injection of capital from shareholders
amounting to Rp 5.6 billion in October 2000 (IFS injected S$0.6 million (Rp 2.63 billion).
The increase was necessary to meet the regulatory requirements set by the Indonesian
MoF to upgrade NIF's license from that of a factoring company to a multi-finance
company.30
During the year 2000 the company managed to book a factoring volume of Rp 73 billion.
Collection efforts of non-performing accounts yielded recoveries of approximately Rp 2
billion but additional provisions for doubtful debts led to a loss of Rp 3.9 billion.
Meanwhile, following the announcement, the company engaged in other financial services
such as automotive financing.31 The Niaga Leasing CoRp, meanwhile merged with NIF,
has its own homepage in contrast to Niaga International Factoring CoRp.
The company takes part in online factoring via its e-commerce platform, "IntFactor". The
B2B e-commerce became operational in 2000. IntFactor's Client Enquiry Module (CEM),
operational in 2001, allows the client’s checking account status and requesting funds
through Internet.
NIF collaborated with KUKMI (Kerukunan Usaha Kecil dan Menengah Indonesia, an SME
association) in financing SME with factoring. The target for 2001 is Rp 200 billion.
Parman Nataatmadja, president director of NIF, explained that until September 2001 his
clients took advantage from factoring amounting to Rp 110 billion. The Company Niaga
Leasing will be merged with NIF as a necessary step to restructure the business of Bank
Niaga. Z. Ivan
29
Besides PT Bank Niaga is 100% owner of PT Niaga Leasing Corporation and 79.65% owner of PT Saseka Gelora
Finance (a MFC). (Source: Far-East Corporate Database capitaline.com/cs0612.htm, 03 Nov 2001). PT Bank Niaga is
owned by several companies with PT Austindo Teguh Jaya as major shareholder (42%) and about 20 more shareholders
(among them insurance companies, international trusts) owning each less than 13% (data per 1996).
30
Lua Cheng Eng, Chairman IFS, 16 March 2001 dev.expressmulitmedia.com/Ifs/annualreport00_1d
31
Yosef Ab Badilangoe, Vice Chairman of PT International Factors,
http://dev.xpressmultimedia.com/Ifs/annualreport00_1e.pdf
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ANNEX 3b
Apthioman, credit director NIF, announced that the MF industry is driven by financing
motor vehicles so that starting September NIF will not only engage in factoring but also in
leasing. Activities will focus on Kalimantan Timur (through Saseka Gelora Finance),
because interest rates that can be earned are higher than in Jakarta.32
Mr. Arwin Rasyid joined PT Niaga Factoring in 1990 as a Managing Director after 8 years
with Bank of America. He became vice chairman of the Indonesian Bank Restructuring
Agency in January 2000.
The president director from 1994 to 1999, Ms. Gunarni Soeworo, became president of the
private banker's association Perbanas. Among other appointments (Institut Bankir
Indonesia, Lembaga Manajemen PPM, member of BPPN Oversight Committee, since
1999) Ms. Gunarni Soeworo acted also as commissioner of PT Niaga Factoring.
Conglomerates
The Indomobil Group
At least four enterprises with "business line: financing and factoring company for lease
and purchase Indomobil Group's products" are part of the Indomobil Group:
PT Bringin Indotama Sejahtera Finance,
Jl Hayam Wuruk 108,
Jakarta 11160,
Tel 6498218, 7397088, Fax 6408235;
PT Indoarta Multi Finance
Wisma Indomobil 6 fl., Jl Undaan Wetan 50
Surabaya 60272
Tel 031 45600, 46923, 41035, 40273 Fax 514272
PT Indomaru Multi Finance
Wisma Indomobil, 11 fl., Jl Haryono Kav.8,
Jakarta 13330
Tel 8564846, Fax 8564382
PT Swadharma Indotama Finance
Central Plaza, 11 & 15 fl., Jl. Jendr. Sudirman 47
Jakarta 12930
32
Tel 5702228, 5207990, Fax: 5702236
Bisnis Indonesia, 29 September 2001, "NIF targetkan leasing Rp 130 miliar".
25
ADB
SME DEVELOPMENTTA
ANNEX 4
PT. Sinar Mas Multifinance (SMM), Full Service Multi Finance
(A self-presentation of a company linked to BII Bank International Indonesia33)
Sinar Mas Multifinance, a wholly owned subsidiary company of Sinar Mas Multiartha, was
established and operated in 1996 with Leasing and Factoring as its core business. With its
total assets reaching Rp1.0 trillion (1999), the company was one of the largest
multifinance companies in Indonesia in terms of assets.
The company has a solid customer base, more than top 60 companies also including a
few companies under Sinar Mas Group. The multifinance operation supports the banking
network, thus provide financial support to the holding company structure.
The high reputation of Sinar Mas Group has gained the confidence, the trust and support
of foreign investors, which lead to the successful negotiation of Loan Rescheduling Facility
of our Medium Term Note (MTN) amounting to USD 46.17 million on December 1999.
Factoring
Factoring is a recent addition to the SMM business portfolio through the establishment of
PT Sinar Mas Multifinance. There has been a significant gain on the performance of
competition since the introduction of factoring to the Indonesian finance sector in 1994. At
this time, factoring constitutes over 90% of the SMM total earning assets. SMM through its
subsidiary SMF is now the largest factoring company in Indonesia with a volume of
receivables doubling from Rp 629 billion in 1995 to Rp1.2 trillion in 1996.
This extraordinary growth has been fueled by the Sinar Mas Group’s vast network and
client based in which SMF can tap on. Enhanced by a fast credit draw down approval
system of less than a week, it is especially attractive to companies in need of working
capital in a hurry. With the absence of a lending limit as imposed on banks extending
standard instrument of credit, a further advantage is the lighter collateral requirements
compared to a normal bank loan requirement.
Factoring is profitable for the company with minimized risks, since SMF lends to the 35 to
40 of their top corporate clients whom have established a long business relationships with
the Company and the Sinar Mas Group. At the same time, the Company maintains a
policy of not extending factored receivables of more than 25% of its total portfolio in any
sector. Presently, SMF has no plans to extend its factoring service to the retail sector.
33
copy from: http://www.sinarmas.com/subsidiaries.htm., October 2001
26
ADB
SME DEVELOPMENTTA
ANNEX 5
Legal Problems
02-01-2000 17:11:09 Reported by Beta Ramses Riswan
The plaintiff is accused
Penggugat Berbalik Menjadi Tergugat
Pengusaha nasional Nirwan Dermawan
Bakrie, selaku penjamin hutang PT. Bakrie
Capital Indonesia (BCI) digugat pailit oleh PT.
Sinar Mas Multifinance (SMM). Upaya pailit
ditempuh oleh PT. SMM karena Nirwan selaku
Direktur Utama PT BCI yang juga selaku
penjamin hutang PT. BCI lalai dalam
memenuhi
kewajibannya.
Selain
itu,
sebelumnya malahan PT. BCI menggugat PT.
SMM secara perdata ke Pengadilan Negeri
(PN) Jakarta Pusat menuntut agar PT. SMM
menunda penagihan. Sialnya lagi, tuntutan PT.
BCI itu dikabulkan,
Oleh majelis hakim PN Jakarta Pusat dalam
putusannya tertanggal 28 Desember 1999
memerintahkan PT. SMM agar menunda
penagihan hutang atas PT. BCI sampai
dengan adanya putusan berkekuatan hukum
tetap dalam perkara ini, dan apabila
melanggar ketentuan tersebut maka PT. SMM
dihukum denda Rp10 juta per hari. "Putusan
itu jelas tidak masuk akal dan memberikan
dampak buruk karena membuat perusahaan
yang bergerak di bidang pendanaan merasa
was-was untuk memberikan dana kepada
debitur, karena debiturnya bisa ngemplang
dan dilindungi oleh pengadilan. Mereka
berlindung di balik putusan tersebut.
"Masa’ klien kami sebagai kreditur dilarang
menagih padahal sudah jatuh tempo," kata
Abdul Hakim Garuda Nusantara, SH, LLM,
pengacara PT. SMM Nirwan.
Menjamin
Karena itulah gugatan pailit terhadap Nirwan
Bakrie selaku penjamin hutang PT. BCI pun
dilancarkan oleh PT. SMM ke Pengadilan
Niaga (PN) Jakarta Pusat. Dalam sidang yang
diketuai oleh hakim Sihol Sitompul, SH,
pengacara PT. SMM membeberkan bahwa
pada tanggal 13 Agustus 1997 di hadapan
notaris FX Budi Santoso Isbandi, PT. SMM
dengan PT. BCI menandatangani perjanjian
anjak piutang (factoring agreement). Masih di
hadapan notaris yang sama, PT. SMM juga
menandatangani perjanjian garansi yang
isinya antara lain menyatakan bahwa Nirwan
Dermawan Bakrie selaku Direktur Utama PT.
BCI tanpa dapat dicabut kembali dan tanpa
syarat menjamin kepada PT. SMM selaku
kreditur. Isinya, pelunasan yang tepat waktu
jatuh temponya jumlah uang yang dari waktu
ke waktu wajib dibayar oleh PT. BCI
berdasarkan
ketentuan-ketentuan
dalam
perjanjian anjak piutang dan setuju pada
setiap waktu fiminta oleh PT. SMM selaku
kreditur untuk membayar kepada PT. SMM
setiap dan semua jumlah yang wajib dibayar
oleh PT. BCI. Dengan adanya garansi atau
jaminan yang diberikan Nirwan itu, PT. SMM
berdasarkan perjanjian anjak piutang telah
memberikan pinjaman kepada PT. BCI
sebesar Rp60 miliar.
Dengan demikian PT. SMM berhak untuk
menagih secara langsung kepada Nirwan
sebagai penjamin pribadi untuk melunasi
hutang PT. BCI. Adapun jumlah hutang (baik
pokok, bunga dan denda) yang harus dibayar
Nirwan kepada PT. SMM per tanggal 30
Desember 1999 adalah sebesar Rp277,35
miliar, dan jumlah tersebut masih akan terus
bertambah sampai dibayar lunas. Jangka
waktu perjanjian anjak piutang itu sendiri
adalah 12 bulan terhitung sejak tanggal 21
Agustus 1997 sampai dengan 21 Agustus
1998. Dengan demikian jatuh tempo hutang
Nirwan kepada PT. SMM adalah tanggal 21
Agustus
1998.
Karena
Nirwan
tidak
melaksanakan kewajibannya kepada PT. SMM
pada saat jatuh tempo, maka PT. SMM
memberikan surat peringatan kepada PT. BCI
untuk segera melunasi hutang tersbut.
Pihak PT. BCI menjawab bahwa pihaknya
mengakui adanya kewajiban kepada PT.
SMM, namun belum dapat memenuhinya
karena keterbatasan likuiditas akibat krisis
ekonomi dan moneter yang melanda negeri ini.
Karena baik PT. BCI maupun Nirwan tetap
tidak melaksanakan kewajibannya kepada PT.
SMM
meskipun
berkali-kali
diberikan
peringatan, maka pada tanggal 9 Desember
1999 dan 30 Desember 1999 pengacara PT.
SMM melayangkan somasi kepada Nirwan
yang intinya meminta agar yang bersangkutan
melaksanakan seluruh kewajibannya kepada
PT. SMM.
27
ADB
SME DEVELOPMENTTA
Namun,
bukannya
kewajiban
yang
dilaksanakan oleh PT. BCI maupun Nirwan,
malahan mereka lewat pengacara Gayus
Lumbuun, SH, mengajukan gugatan perdata
terhadap PT. SMM ke PN Jakarta Pusat yang
sialnya lagi gugatan mereka dikabulkan oleh
majelis hakim. Jelas pengacara PT. SMM
merasa keberatan atas putusan provisi
(pendahuluan) yang dijatuhkan oleh majelis
hakim PN Jakarta Pusat tersebut. Adapun
keberatan pengacara PT. SMM adalah
putusan
provisi
tersebut
tanpa
mempertimbangkan keharusan adanya sifat
mendesak (urgent) yang menjadi syarat bagi
sebuah putusan provisi. "PT. BCI dan Nirwan
adalah debitur PT. SMM yang sudah mengakui
hutangnya tetapi tidak mempunyai itikad baik
untuk melunasi hutangnya tersebut. Adalah
tidak lazim dan tidak adil pengadilan
memerintahkan para kreditur untuk menunda
menagih hutang bahkan menghukum denda
bila melanggar ketentuan tersebut. Padahal
dasar
hukum
kami
kuat,
jadi
apa
sesungguhnya
dasar
hukum
dan
pertimbangan
pengadilan
mengeluarkan
putusan provisi tersebut," tukas Abdul Hakim.
jatuh tempo dan dapat ditagih. Kewajiban
seorang
penanggung
(penjamin)
untuk
melakukan
pembayaran
atas
hutang
tertanggung baru akan muncul jika si
tertanggung telah diwajibkan untuk membayar
dan terbukti tidak mampu melakukan
pembayaran atas hutangnya," kata Freddy.
Lebih lanjut Abdul Hakim menyatakan,
putusan provisi tersebut telah disalahgunakan
untuk melindungi para debitur yang tidak
mempunyai itikad baik untuk menyelesaikan
kewajibannya melunasi hutang-hutangnya.
Putusan provisi itu akan menimbulkan rasa
takut dan tidak aman bagi investor jasa
keuangan, para kreditor baik domestik maupun
internasional karena tak adanya kepastian
hukum yang memberikan jaminan dalam
berbisnis. Karena begitu kompleksnya perkara,
maka dalam gugatan pailit ini pengacara PT.
SMM meminta kepada pengadilan niaga agar
menghadirkan hakim adhoc. "Padahal kita
tahu seluruh kekuatan bangsa ini sedang
digerakkan untuk menggairahkan kegiatan
investasi modal untuk mengatasi krisis
ekonomi," ujar Abdul hakim.
Apakah Nirwan akan terbebas dari kewajiban
membayar hutang sampai menunggu perkara
gugatan perdata sebelumnya memperoleh
inkraaht (berkekuatan hukum tetap). Apakah
PT. SMM mau menunggu putusan perdata
atau tetap melanjutkan gugatan pailit, lihat saja
perkembangan selanjutnya.
Dengan demikian, dengan adanya putusan
provisi tersebut maka, lanjut Freddy,
berdasarkan
hukum
PT.
BCI
belum
mempunyai kewajiban untuk melakukan
pembayaran kepada PT. SMM. Dengan
demikian, Nirwan pun tidak mempunyai
kewajiban untuk melakukan pembayaran
hutang sampai dengan gugatan perdata
sebelumnya itu mempunyai kekuatan hukum
tetap.
"Karena gugatan perdata sebelumnya yang
menjatuhkan
putusan
provisi
belum
mempunyai kekuatan hukum tetap, maka
menurut hukum, klien kami tidak mempunyai
hutang yang jatuh tempo dan dapat ditagih.
Sehingga permohonan pernyataan pailit yang
diajukan oleh PT. SMM harus ditolak," tukas
Freddy.
Gugatan Harus Ditolak
Pengacara Nirwan Dermawan Bakrie, Freddy
T. Simatupang, SH, dalam tanggapannya atas
permohonan pailit PT. SMM menyatakan
bahwa gugatan pailit tersebut harus ditolak.
Hal ini semata-mata karena adanya putusan
pengadilan yang menyatakan bahwa hutang
belum jatuh tempo dan dapat ditagih sesuai
putusan provisi Pengadilan Negeri Jakarta
Pusat. "Telah jelas dan tegas bahwa hutang
yang menjadi tanggungan klien kami belum
28
ADB
SME DEVELOPMENTTA
ANNEX 5b
The plaintiff is accused (Summary)
On August 13, 1997, in presence of a notary, the multifinance
company SMM signed a factoring agreement with BCI.
At this opportunity, the president director of BCI, Nirwan, signed a
personal guarantee unconditionally guaranteeing to SMM as creditor
the scheduled payments BCI has to pay to SMM according to the
factoring agreement.
Based on this guarantee and based on the factoring agreement SMM
extended a loan to BCI amounting to Rp 60 billion. The factoring
agreement was to end after one year on 21 August 1998. Neither BCI
nor Nirwan did not dispute the debt being overdue and explained that
the liquidity situation does not allow settling the amount. Several
reminders to pay were fruitless. A somation was SMM's reaction.
According to her lawyer, SMM is entitled to directly ask from Nirwan
as private guarantor the settlement of principal, interest and fines
amounting to Rp 277.35 billion until 30 December 1999.
SMM filed for declaring BCI bankrupt. In turn, BCI asked a court to
decide that SMM has to stop collecting the outstanding amount. The
request of BCI was granted based on a "provisional decision"
(putusan provisi/pendahuluan). However, the urgency, the
prerequisite for a "provisional decision" (putusan provisi), is
questioned.
The judge decided that SMM has to delay the efforts to collect the
outstanding amounts until a final court decision has been made.
Otherwise SMM has to pay Rp 10 million fine per day.
The instrument of a "provisional decision" has been used to protect
the debtor. Nirwan's lawyer stated that, because of the "provisional
decision", the debt was not yet due. Therefore, SMM cannot collect
the money or file for bankruptcy.
29
ADB
SME DEVELOPMENTTA
ANNEX 6
Data Statistik Lembaga Keuangan
Statistical Data on Financial Institutions
The statistical data presented below origin from a survey published by BPS (Badan Pusat
Statistic) on which 41 MFC (37 domiciled in Jakarta) responded. The figures are averages
per MFC. The report did not mention how many of the 41 enterprises were actually
engaged in factoring.
1998
1999
Remarks
Factoring clients
- individuals
8
- enterprises
2
Factoring customers
- individuals
0
- enterprises
42
average/client:
4.234
Received from customer
- individuals
Rp
311 million
- enterprises
Rp 3,382 million
A/R bought from clients
- individuals
Rp 3,634 million
average/client:
Rp 454 million
- enterprises
Rp 3,535 million
average/client:
Rp 1,767 million
Operational income
Rp 4,548 million
Rp 1,585 million
incomes decreased
drastically
Factoring advances
Rp 46,742 million
Rp 41,003 million
book values decrease only slightly
(according to balance sheet)
Based on factoring advances the survey covered only about 1% of the factoring market as
reported by BI/MoF.
34
Despite practicing "with-recourse" facoring, factors buy only A/R to be settled by selected customers.
30
ADB
SME DEVELOPMENTTA
Portfolio of Multifinance Companies
Rp billion
12/1998
12/1999
06/2000 12/2000 06/2001
9,698
6,004
7,142
334
224
333
Consumer finance
1,753
1,401
2,309
Credit card finance
173
109
130
Leasing
5,281
4,006
4,204
Factoring
7,638
6,183
5,784
Consumer finance
3,496
2,922
3,551
Credit card finance
241
228
220
14,979
10,010
11,346
13,731
15,164
Factoring
7,972
6,407
6,117
6,553
4,030
Consumer finance
5,249
4,323
5,860
8,515
10,767
Credit card finance
414
337
350
403
558
63%
65%
60%
61%
63%
5%
4%
3%
4%
5%
Consumer finance
30%
33%
32%
36%
39%
Credit card finance
39%
42%
32%
35%
37%
Joint Ventures
Leasing
Factoring
Private National Enterprises
Total
Leasing
Joint Ventures in % of Total
Leasing
Factoring
Portfolio Quality (% of assets classified "pass")
1996
1997
1998
1999
10/2000 12/2000 06/2001
Leasing
95.6%
94.7%
72.8%
70.3%
69.2%
69.0%
72.7%
Factoring
99.5%
96.7%
67.1%
36.3%
28.5%
42.7%
25.2%
Credit Card
91.9%
90.0%
59.5%
31.4%
52.9%
66.8%
67.4%
Cons. Finance
98.5%
97.6%
92.6%
90.9%
93.7%
94.7%
95.9%
Source: MoF, BI.
31