Jakarta (ANTARA) - Peer-to-peer (P2P) lending from financial technology or fintech firms can serve as an alternative source of financing other than banking for micro, small, and medium enterprises (MSMEs), the Financial Services Authority (OJK) has affirmed.

"From the start, the initiation of (peer-to-peer lending by fintech) is to fund our people who are unbankable and underserved. So the ones more bankable would go to the bank, us here is for MSMEs," director of financial technology supervision at the OJK, Tris Yulianta, said here on Tuesday.

The issue of MSME financing must be addressed because they are a key sector for the future development of the national economy, he added.

There are 65 million MSMEs in Indonesia, which employ 120 million people, or 96.9 percent of the total workforce in the country, he noted. Moreover, they contribute about 60.51 percent to the total national gross domestic product, Yulianta pointed out.

However, some of these MSMEs are facing difficulties in certain aspects, such as ensuring human resource quality, carrying out networking, conducting digitalization, and obtaining permits, he elaborated. Hence, financial technology programs can serve as a solution to the issue of MSME human resources, he noted.

“Us, OJK and associates, AFPI (Association of Fintech Collective Funding), are collaborating to improve human resources of those MSMEs. Moreover, we are assisting with aspects such as networking, marketing, or innovation of digitalization," he informed.

Yulianta cited March 2023 data showing that Rp7.89 trillion (US$533 million) in funding, or 39.97 percent of total industry funding, was arranged via peer-to-peer lending.

He also informed that as per the data from the past 12 months, that is, in the period from April 2022 to March 2023, P2P lending accounted for as much as Rp99.15 trillion (US$6.7 billion), or 43.33 percent of the total industry funding.

At the end of March, there were 4.67 million accounts of active MSMEs borrowers, with total funneled funding of Rp19.48 trillion (US$1.3 billion), or 38.18 percent of the total industry funding, he noted.

He said that those figures show that P2P lending has vast potential to support national MSME growth.

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Translator: Bayu Saputra, Mecca Yumna
Editor: Rahmad Nasution
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