Global Business Guide Indonesia

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Intan Baruprana Finance | Mr Hartono Jap
Mr Hartono Jap

Our success in attracting investment is predicated on the key strengths of transparency, management capabilities and synergy within the group

Mr Hartono Jap, President Director

PT Intan Baruprana Finance is a leading financing company in Indonesia that is part of the esteemed PT Intranco Penta Group. Having recently listed on the IDX, what more can you tell us about your firm’s background and its main strategies going forward?

Our company was established in 1991 and was later acquired by Intranco Penta in 2003 for the purpose of helping the group sell its heavy equipment. I joined Intan Baruprana Finance [IBF] in June 2012 and was asked to tap into my experiences as a seasoned banker to make IBF into a well-established, independent, publicly listed company. This mandate necessitated a shift away from the company’s family-oriented style to become a more professionally run business, and as such during the second semester of 2012 we focused on fine-tuning our internal operations, policies and SOPs.

In taking this course of action, we sought to become more user and market friendly as well to ensure compliance with current regulations. One of our priorities was to make sure that every credit file has all the necessary information gathered and compiled to minimise instances of missing client data. In 2013, we turned our attention to strengthening our capital base and appointed Ernst & Young to find suitable investors for us. Through this process we began working with Phillip Capital, one of Singapore’s largest fund managers, and lowered our leverage ratio from 8 to below 3. We were proud to have Phillip Capital as our investors, as they took several years to first study the Indonesian market before entering and IBF holds the distinction of being their first investment in the country. IBF is also the first exit achieved by this Singaporean firm in Asia Pacific, as this took place during our IPO in 2014. Our success in attracting investment is predicated on the key strengths of transparency, management capabilities and synergy within the group. When you want to do business in Indonesia, it is very important to choose the right partner with the right management.

It is our goal for this year and the future to continue our development into a professionally run financing firm with diversified exposure. Two and a half years ago, 75% of our portfolio was in the coal industry whereas mining now accounts for just 50% of our portfolio. We now also finance non-group products including hospital equipment such as MRI scanners, laundry machines for hotels, and oil rigs. Of our 1.1 trillion IDR in new sales last year, 85% came from the financing of non-group products. IBF is no longer a stock exposed to a single sector and as such is non-cyclical.

Given the competitive nature of Indonesia’s financing industry, what would you say are IBF’s predominant USPs today?

There are approximately 200 finance companies in Indonesia. With a market cap of 1.1 trillion IDR, we place sixth among these finance firms. Moreover, our stock has been of growing interest to investors given that we have no direct comparison in the stock market. Most of the other listed financing firms operate within consumer financing for cars and motorcycles. Another large subset of listed finance companies is comprised of firms that do everything and offer consumer financing in addition to factoring and leasing. We are one of a kind in the sense that we specialise in financial leases. Among the 200 businesses previously mentioned, there are only a handful that offer this service and most are still privately owned and exist to support group sales.

In the medium and long-term what is your outlook for the development of financing needs in Indonesia?

IBF is preferred by Shariah banks because we finance capital goods as opposed to consumptive goods.

As such, whether the economy is in the midst of a boom or a downturn, there will still be financing requirements for us to cater to. For example, financing in the mining industry during a period of slower growth will be geared towards financing for existing and used machines. This still presents opportunities for us; it is just a matter of whether we are providing financing for new or used equipment.

It is important for any investor that want to come into Indonesia to recognise that this is a country in which they are likely to experience significant growth irrespective of political uncertainty, insofar as they have a long-term view and are patient in making the most of the many opportunities on offer.

A lot is expected of the new government to improve upon the business climate in Indonesia. In your view, what should the new administration prioritise in spurring the development of your sector?

We are most interested in seeing the new government take steps to address Indonesia’s need for infrastructure through the construction of roads and bridges, among other civil engineering projects. Ultimately, we support any initiative taken to facilitate infrastructural development, and expect to play a key role in providing financing insofar as there is a clear source of repayment.

How does IBF plan to pursue innovation going forward?

Our plans for innovation are closely linked to the ongoing improvements being made to our SOPs and internal processes. This involves paying closer attention to knowing our customers before providing financing, in the sense that it is important for us to ascertain their character and the depth of their pockets. It is crucial to take these steps to avoid situations in which customers that appeared well-equipped to repay the financing end up being unable to do so during a period of economic downturn. We have also put in place stricter requirements for financing for our group products such as heavy equipment, in that we will only approve applications from those with clean and clear project sites. We are also now investing in a new IT system to consolidate our end-to-end conventional and Shariah activities.

How is your company positioned towards further cooperation with foreign investors?

Our IPO saw Phillip Capital exit and SBI Holdings from Japan enter as our anchor investor. We are still interested in strategic alliances with foreign investors, and are most drawn to working with those able to provide capital and demonstrate a willingness to enter Indonesia for the long-term. Successful alliances depend upon whether both parties have sincere intentions and a genuine interest in achieving growth beyond the immediate future.

As a final message, what would you like our readers to remember about Indonesia?

For financial investors, my advice is to find the right company and the right management who really provide you with an exit. For real sector investors, my advice is simply to enter and embrace the long-term mindset.

Global Business Guide Indonesia - 2015

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