Indonesia’s online P2P loan sharks are driving people to suicide
- There’s a dark side to Jakarta’s embrace of the digital revolution: unchecked online lending services with increasingly aggressive debt-collection methods
- Total loans from registered lenders hit US$1.07 billion last October, but there are plenty more illegal lenders taking advantage of exorbitant interest rates
INDONESIA’S PRESIDENT JOKO Widodo could not resist spouting jargon as he talked up the Southeast Asian country’s technological prowess during a recent election campaign debate, while his opponent Prabowo Subianto appeared startled by the tech-heavy question tossed at them.
Widodo was optimistic that Indonesia would embrace the digital revolution sweeping across all industries and said even farmers were benefiting from technological change.
In particular, more farmers were receiving micro-financing through peer-to-peer (P2P) microcredit lending, he said, adding that this showed how the financial technology sector had helped to cut out the middlemen between lenders and borrowers.
If only the reality on the ground were that rosy.
The president was right that Indonesia’s financial technology sector has a grand vision to deliver financial services to the country’s unbanked and underbanked, who make up more than 60 per cent of the archipelago’s population of over 260 million.
But he failed to mention that the unchecked spread of microlending, from online lenders not only from Indonesia but apparently from as far afield as China, Singapore, Canada and the United States, has resulted in new forms of intimidation and harassment of borrowers, sometimes with tragic outcomes.