FinTech Companies to Forge a Better Financial System in Indonesia
Indonesia has a somewhat complex relationship with bitcoin and cryptocurrencies in general. For instance, Suasti Atmastuti Astaman, Business Development Manager of Bitcoin Indonesia, has clarified strongly with Coin News Asia that bitcoin is not in fact illegal, but rather restricted in the country.
Taken from their official website, this is the official statement of Bank Indonesia related to Bitcoin and any other virtual currency:
“In view of the Act No. 7 Year 2012 concerning Currency and Act No. 23 Year 1999 which has been amended several times, the latest with Act No. 6 Year 2009, Bank Indonesia states that Bitcoin and other virtual currency are not currency or legal payment instrument in Indonesia.
The society is encouraged to be careful toward Bitcoin and other virtual currency. All risks related to the ownership/use of Bitcoin should be borne by the owner/user of the Bitcoin and other virtual currency.”
In this public statement, the Bank of Indonesia cautions the public against the dangers of using bitcoin and emphasised that it is not legal tender. The bank added that any risks sustained with owning virtual currencies should be dealt by its owners.
Before this, the governor of the Bank of Indonesia already stated that using bitcoin violates a number of the country’s laws. The latest statement doesn’t necessarily ban its use, but contains strongly-worded statements against the cryptocurrency.
Despite all this, the Indonesian populace is beginning to adopt the technology and related services as new FinTech startups help to make them more available and user-friendly. Indonesian FinTech startups have engrossed international VCs, such as the Japan-based firm CyberAgent Ventures. The firm stated that more than half of their new US$50 million funds will be devoted to Indonesian companies endeavouring to penetrate the digital currency world.
Like in most Asian countries, Indonesia’s low bank account and credit card dispersion rate is based on the banks’ failure to understand the financial struggles of the majority of the country’s community. Not only in Indonesia, but in most Asian countries, banks require a list of qualifications and documents in order for a person to apply for a bank account or a credit card, which often is taxing to procure and collate for citizens with low income, or those wanting to send or receive small payments.
Mohit Mehrotra, of Deloitte Consulting, stated:
“Asia has a huge potential for FinTechs. Countries like India and Indonesia, with their low financial services penetration and large unbanked and underserved populations, are perfect breeding grounds with several white spaces for FinTechs to play an important role. Big banks, by nature of their legacy set-ups, find it increasingly difficult for forging new digital-enabled business models that FinTechs specialise in.”
With this in perspective, digital currencies may just be the answer to financial instability after all.