Starting 2021 on a productive note, the Indonesian Financial Services Authority, Otoritas Jasa Keuangan (OJK), has officially introduced securities crowdfunding to the Republic as the Muslim nation ramps up capital market development via technological avenues.
Having already established a vibrant equity crowdfunding and peer-to-peer financing industry, Indonesia is counting on securities crowdfunding to widen the financing net further for SMEs. The OJK believes that this new tech-enabled financing vehicle will deepen the capital market and benefit the SME sector. At present, the Indonesian government’s SME-related electronic procurement stands at about IDR74 trillion (US$5.32 billion) involving about 160,000 SMEs, noted the regulator.
Securities crowdfunding activities will be regulated under the existing regulations for information technology-based crowdfunding which have been expanded to allow SMEs to participate in the capital market through the offering of securities other than equities such as debt securities and Sukuk.
It is worth noting that the framework has also eased requirements for issuers. Previously, only legal entities in the form of PT (Perseroan Terbatas or limited liability company) can raise funds through crowdfunding; however, cooperative legal entities as well as civil associations, corporates and limited partnerships are now able to raise funds through crowdfunding platforms.
Fintech start-ups are capitalizing on this new development. It is learned that equity crowdfunding platform Bizhare has converted its business model and is now operating as a securities crowdfunding platform.
“Through this securities crowdfunding service, Bizhare will present various types of bonds products and also Sukuk. With the increasing number of services that Bizhare provides, it is hoped that the public will have many choices in investing,” the firm explained.
To assist it in the supervision of the crowdfunding sector, the OJK has appointed ALUDI as the association to develop the industry’s ecosystem. It is tasked with formulating a code of conduct as well as to monitor its members to ensure compliance with policies.