PNM’s new president director, Arief Mulyadi, who was appointed on Tuesday, said the company would strive to keep up with the times, building upon the policies put in place by his predecessor, Parman Nataatmadja.

“Digitalization is one of the facilities we have to take advantage of,” he told The Jakarta Post on Tuesday.

Arief said he had worked at PNM, a company specially tasked with providing loans to micro businesses and SMEs in sectors such as trading, handicraft and agriculture, since it was established in 1999 and had learned a lot from Parman, who had led the company for the past 10 years.

Arief said PNM was expecting to serve 80,000 customers and issue Rp 3.9 trillion (US$285.9 million) in loans through its micro capital service unit (ULaMM) in 2018, which compares to 70,000 customers serviced in 2017 with Rp 4.1 trillion in loans.

He added that PNM was also looking to increase the number of customers through its women-based finance development program Mekaar to 4 million by the end of the year, up from 2.5 million last year.

ULaMM gives Rp 25 million to Rp 300 million in direct capital to micro-enterprises, while the Mekaar program focuses on women from “pre-prosperous” families, providing soft loans ranging from Rp 2 million to Rp 5 million per person to create micro businesses.

“We want to create a sustainable PNM for the future,” Parman had said at a company-wide forum on Monday, “so we have to adapt to the rapid changes in technology, including digitalization.”

Arief said the company had already begun to move into that direction by requiring ULaMM customers to repay their loans through mobile banking.

He said the next step the company was looking into was how to shorten the distribution network using digitalization, allowing Mekaar customers to purchase directly from producers, thus reducing their costs.

However, when asked about the possibility of partnerships with the burgeoning fintech sector, particularly peer-to-peer lending companies, both Arief and Parman demurred.

“Peer-to-peer lending is still relatively unregulated, so right now it is a little risky,” Parman said. “So, we will wait until it is stable.”

Arief echoed Parman’s sentiment, saying that PNM had no plans to wade into fintech in the near future.

Nevertheless, he said he thought PNM employees could learn from the industry’s digital innovation, which is why Adrian Gunadi, CEO and founder of peer-to-peer lending company Investree, was invited to speak at the forum.

Adrian said digitalization was a game-changer that would transform the financial services industry, allowing fintech startups to fill the gap left by the banking system.

“There is a gap that is not served by the formal banking sector, whether for payments, savings or loans,” he said. “There is a credit gap of $57 billion that can be served by alternatives to banks, like PNM.”

Micro-lending services, such as those provided by PNM and Investree, are seen as one of the ways to lift the rate of financial inclusion in Indonesia, which at 36 percent is among the lowest in the region.

“PNM is at the forefront in helping increase public prosperity and lowering the poverty rate,” said Trade Minister Enggartiasto Lukita, who also spoke at the forum.

He added the company’s efforts were in line with President Joko “Jokowi” Widodo’s vision to increase assistance for SMEs, as opposed to large corporations.

He also indicated his ministry was open to greater cooperation with PNM and said he would suggest that Jokowi provide Mekaar customers, most of whom are peddlers, with carts, tents or other facilities.

“So, for once Jokowi can give out carts, not just bicycles,” he said jokingly, referring to the President’s keenness in giving out bikes during his regional visits. (kmt)

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