A call to the boss: Indonesia faces aggressive Chinese online lenders


JAKARTA / BEIJING (Reuters) – Indonesian authorities have generally opened their arms to fintech companies offering online loans in Southeast Asia’s largest economy, seeing them as a way to get credit to tens of millions of people often unable to access bank loans.

A man sleeps near a closed warehouse in Tanah Abang Market in Jakarta, Indonesia, September 6, 2018. REUTERS / Willy Kurniawan / Files

But the arrival of a wave of predominantly Chinese fintech lenders, who often fail to register and use aggressive debt collection practices, is now worrying regulators. For Chinese platforms, Indonesia’s young market of more than 260 million people is an attractive target, especially after a crackdown on the loosely regulated micro-credit sector in the country.

Four people in Indonesia who failed to repay their loans on time told Reuters that Chinese fintech lenders had taken control of their phone contacts – permission is granted when the app is installed – and harassed their colleagues and friends.

One of them, Nesika Yustines, a 26-year-old secretary in the Tangerang area near Jakarta, said she was stunned when debt collectors repeatedly called her boss to tell her she was had a week to repay his loan and 20% interest.

“They demanded payment from my boss and my boyfriend,” she said. “It’s embarrassing, it’s like they’ve become collateral in all of this.”

Hendrikus Passagi, who oversees fintech for Indonesian financial regulator OJK, said some borrowers have lost their jobs because of such calls.

“These practices go against God. We are a religious country. In Indonesia, if I lend you money and you don’t pay, I won’t come to your house to humiliate you, ”he said.

In China, financial regulators issued tough new rules on online micro-lenders last December, after a barrage of criticism of their tactics.

Seeking to expand into new markets, Chinese online lenders have been grouping in Indonesia since 2017 to meet with officials, bankers and executives to set up operations, according to two China-based businessmen. organizing such tours.

Chinese lenders often set up shell companies in Hong Kong and Singapore to bypass Beijing’s strict controls on cross-border money flows and hire attorneys as local partners, said Jin Xiang, who heads BlueBoat Global, a company Beijing-based dedicated to helping businesses. explore new markets.

His company has been touring Indonesia since late 2017, and the last tour was last month.

Indonesian regulator OJK produced a blacklist of 226 banned fintech lenders in July and updated it in early September with 407 banned platforms.

The regulator told Reuters more than half were Chinese, but they also included a handful of Eastern European lenders as well as a US lender.


Fintech lenders, which operate platforms designed to provide relatively modest loans to individuals and small businesses, are seen by Indonesian authorities as part of the solution to an annual shortfall of $ 73 billion between the estimated financing needs of the government. country and the amount provided by banks.

The sector is still growing. Indonesia’s 64 registered fintech lenders disbursed $ 534 million between January and the end of July while earlier this month Go-Jek, the country’s largest online platform, partnered with three peer-to-peer lenders. local to-peer as part of its advance in fintech, or financial technology.

But despite efforts by Indonesian authorities, with the help of Google, to block apps and websites offered by illegal lenders, borrowers claim that many continue to operate and demand repayment even after being banned.

42-year-old office assistant, who asked not to be named, was desperate to renegotiate his loan after debt collectors at online lender Uang Express began calling relatives and colleagues for loan repayment of 2 million rupees ($ 135).

Uang Express is one of more than 200 Chinese consumer loan platforms banned for not registering or breaking laws. Its platform was downloaded more than 100,000 times from the Google Play Store before being deleted.

When the office assistant tried to visit the lender’s headquarters in Jakarta, he found a locked warehouse.

Reuters then traced the office of Second Installment Financial Technology, which is listed by Uang Express as its parent company and is not banned.

“How did you find us? You’re not supposed to find us. That’s the purpose of fintech,” a spokeswoman said, confirming that it was the office of the second installment, but declining to comment further.

Second Installment Financial Technology serves ads on the same web address and mail server as Shanghai-based P2P platform Miao Miao Technology, which has the same platform and logos for Chinese customers as Uang Express.

Uang Express did not respond to requests for comment.

Reuters could not reach Miao Miao Technology to confirm if it had any links to the second tranche.


Indonesian regulators stress that the complaints do not apply to all Chinese fintech lenders, praising those who have obtained licenses.

“There are good Chinese lenders. Those that are publicly traded tend to be more transparent, ”OJK’s Passagi said.

Beijing-based Hexindai Inc, listed on Nasdaq in November, acquired a 20% stake in Indonesian online lender Musketeer in August with the aim of capitalizing on Indonesia in its international expansion.

A spokesperson for Hexindai said he disapproves of the “vicious debt collection methods” of some Chinese P2P companies and only contacted the emergency contact chosen by customers regarding overdue loans and reported borrowers to a national blacklist if the loan remains unpaid after 90 days.

But not all follow the rules, including the requirement for foreign lenders to have an Indonesian partner owning at least 15 percent of their local affiliate as well as local administrators.

Two operators said some Chinese lenders were willing to pay between 500,000 yuan and 1 million yuan ($ 73,115 to $ 146,430) for “one-stop-shop” agents responsible for handling the registration and hiring of local staff.

“Locals probably don’t know that the Chinese are behind these loan companies,” said Wang Lu, marketing director of another business travel organizer, Xinliu Finance.

With closer scrutiny in Indonesia, he said lenders would look to other markets with large populations, underdeveloped financial systems and weak regulations.

Jin Xiang of BlueBoat said he is already starting to organize tours to Vietnam, which he cited as a top destination for fintech micro-lenders.

($ 1 = 6.8387 yuan Chinese renminbi)

Report by Shu Zhang in BEIJING and Fanny Potkin and Tabita Diela in JAKARTA. Additional reporting by Cindy Silviana in Jakarta; Editing by Ed Davies and Raju Gopalakrishnan


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