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View all search resultsKPPU’s hefty fines threaten P2P lenders’ survival, shake investor confidence
Experts noted that similar maximum interest rate rules exist in other countries, but argued that Indonesia’s implementation needs improvement.
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Illustration of fin-tech. (Shutterstock/File)
I
ndonesia’s fintech industry is bracing for impact amid fears of potential company closures and weakening investor trust after the Business Competition Supervisory Commission (KPPU) slapped peer-to-peer (P2P) lending platforms with hefty fines over alleged interest rate cartel practices.
“Our concern is that many P2P lenders will shut down because they are unable to pay the fines,” Indonesian Fintech Lenders Association (AFPI) chairman Entjik S. Djafar told The Jakarta Post on Tuesday.
KPPU announced on Thursday that 97 P2P lending companies, which represent all members of AFPI, had violated Article 5 of Law No. 5/1999 on monopolistic practices and unfair business competition, and were consequently ordered to pay a combined total of Rp 755 billion (US$44.5 million) in fines.
Read also: KPPU slaps $44m fine on P2P lenders over cartel scheme
Entjik also expressed worry over a potential decline in investor trust, which could lead to more investors and large funders in the sector, that he called “super lenders”, exiting the industry.
“We hope there will be no changes to service quality [of fintech platforms]. Regarding the interest rates, they will remain unchanged because they are already set by the OJK [Financial Services Authority],” he added.
In a meeting with the House of Representatives Commission VI, which oversees trade and investments on Monday, Entjik insisted that the fintech platforms were not guilty and had instead adhered to the OJK’s directive to cap interest rates in a bid to protect consumers from predatory pricing.
