TEMPO.CO, Jakarta - Non-bank financial industries are becoming increasingly worried over Indonesia's weakened economy. An economic downturn is signaled by declining purchase power, slow state budget absorption and volatile financial markets.
Financing and insurance business are some of the most exposed to the weak purchase power, with sales of vehicles that have dropped quite significantly in the first half of this year.
According to data provided by the Financial Services Authority (OJK), the multifinance industry posted disappointing performances per April 2015. Conventional financing only grew 4.34 percent to Rp368.5 trillion, while sharia financing plummeted 24% to Rp14.73 trillion.
Meanwhile, credit insurance recorded a year-on-year (yoy) growth of -11.6% to Rp718.5 billion in the first quarter of this year.
The OJK suggested businesses not to set high targets for the second semester that might only lead to projection cuts when things are not taking a better turn.
However OJK's deputy for non-bank supervision Dumoly F. Pardede remains hopeful that the insurance business will be OK for the rest of this year.