Jakarta – The Indonesian Credit Guarantee Companies Association (Asippindo) has urged regulators to establish rules that prevent overlap between the insurance and guarantee industries. Currently, the boundaries between these two industries are unclear, allowing insurance companies to operate guarantee businesses just like dedicated guarantee companies.
"We have included this point in our proposal for the draft Financial Services Authority Regulation (POJK) that is currently being developed," said Asippindo Chairman Diding S. Anwar, who is also the President Director of Perum Jamkrindo, at Hotel Borobudur, Jakarta (12/11).
Diding made this statement during Asippindo’s working meeting, which was attended by all its members. Asippindo was founded by Jamkrindo and several Regional Credit Guarantee Companies (Jamkrida). The meeting was attended by the directors of all Asippindo member companies, as well as Muhammad Ichsanuddin, Director of Supervision for Other Financial Institutions at OJK.
The President Director of Jamkrida West Java, Syahrul Davi, expressed hope that in the future, insurance companies will no longer be allowed to engage in guarantee businesses. He suggested that insurance should focus on life insurance and general insurance (property), while credit risk should be managed by the guarantee industry.
"We urge OJK to implement a mechanism similar to South Korea, where there is no overlap between insurance and guarantees," said Syahrul Davi. He added that guarantee companies have a significant responsibility in helping micro, small, and medium enterprises (MSMEs) grow by providing guarantees when they seek bank financing. Without guarantees, MSMEs struggle to secure bank loans due to a lack of collateral.
"In West Java alone, there are 8.9 million MSMEs. Guarantee companies must support them, but at the same time, we also need to be profitable. We hope regulators take this into consideration," he said.
The President Director of Jamkrida Bali Mandara, I Ketut Widiana Karya, stated that his company, despite being only two years old, has already guaranteed MSME loans totaling Rp800 billion for 7,000 clients. From January to September this year alone, the guaranteed MSME credit reached Rp300 billion.
As a newly established company, Ketut Widiana acknowledged that his team still requires training, particularly in improving IT systems, accounting systems, and capital adequacy. "We are glad that Asippindo has been established so we can learn from Jamkrindo, a large state-owned guarantee company," he concluded.
(Source: Harian Indopos, November 13, 2013)