Jakarta. Automotive financing companies under Astra International, Indonesia's largest car distributor and one of the country's biggest conglomerates, have secured $200 million in loans from Japanese banks to finance expansion.
The companies — Astra Sedaya Finance and its subsidiaries Swadharma Bhakti Sedaya Finance, Staco Estika Sedaya Finance, Astra Auto Finance and Pratama Sedaya Finance — operate under a trade name Astra Credit Companies (ACC). They have been leading Indonesia's automotive financing market, booking Rp 24.7 trillion ($1.8 billion) in new financing before last November, up 18 percent from a previous year.
ACC chief executive Jodjana Jody said the group will use the credit line from Japanese banks and loans from local banks to support expansion. Jodjana did not disclose the names of the banks. ACC still has a permit from the Financial Services Authoriy (OJK) to issue Rp 4.3 trillion in bonds, but the company has yet to decide whether it would do it, he said.
Jodjana said the company set its target on new financing this year modestly at Rp 27 trillion, only up 3 percent from Rp 26 trillion in 2016. ACC provides loans for sedans, minibuses, jeeps, pick-up trucks and heavy machinery by individual and corporate clients.
"But the macroeconomic situation that has yet to recover. There's a good chance in [the United States Federal Reserve] raising interest rates, but there're still uncertainties in the first half of 2017," Jodjana said recently.
The Financial Services Authoriy (OJK) noted that 43 out of 201 financing companies in Indonesia saw more than 5 percent of their outstanding financing going bad — 25 of these companies more than 20 percent of bad loans in their books, reflecting a weakness in the sector, said Firdaus Djaelani, a commissioner at the OJK who oversees non-bank financing companies.
At ACC, Jodjana said the companies managed to maintain bad financing, or non-performing financing (NPF) level at 0.59 percent.
"We will remain vigilant in monitoring the NPF," he said.
Nearly two-thirds of car purchases in Indonesia were made with loans from financing companies like ACC, whose businesses are well integrated with dealers and manufacturers.
Indonesian Automotive Association (Gaikindo) estimates car sales to grow by 5 percent next year to 1.1 million. ACC parent Astra International accounts for about half of Indonesia's car market.