Consumer Credit in Indonesia

2020 IMPACT

The government steps in to protect credit card holders

Indonesia’s economy has been hard hit by COVID-19 in 2020, with large-scale social restrictions and social distancing (PSSB measures) taking a heavy toll on both businesses and consumers. A sharp decline in consumer spending and a drop in exports is expected to result in GDP contracting by 1.

Banks fail to bite as the government offers subsidies to encourage lending

As further support, the government has offered subsidies to banks to encourage them to increase their lending and to reduce their lending fees. However, many banks have failed to respond positively to this with the banks and the government seen to have conflicting interests.

Fintech companies benefit from boom in e-commerce

Fintech companies saw rapid growth during the review period, with these helping to provide access to credit for the country’s large unbanked population. The companies provide an easy and fast application process and do not employ strict lending requirements like those applied by the banks.

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