JAKARTA: Capital Market and Financial Institution Supervisory Agency (Bapepam-LK) plans to extend the segment of factoring, which earlier covers only account receivables and financing, to include all receivables. The market watchdog is considering the policy by extending the definition of receivables that can be used by financing companies in factoring transaction, said Head Bureau of Financing and Guaranteeing at Bapepam-LK Ihsanudin. Factoring is a financial transaction in which a business jobs sells its account receivables to a third party at a discount for immediate cash to continue business operation.The new definition will revise the description in Minister Decree No.84/PMK012/2006 on Financing Companies.We think it is a very good proposal, there is still a chance to revise the draft of the law, he told Bisnis over the weekend.Through the financial institution authority, Ministry of Finance is revising the regulation, which will be valid for the financing industry.The broader definition of receivables in factoring would increase the potential business that can be handled by multifinance companies, said PT Danareksa Finance President Director Pedji GoesariantoIf it is limited only to account receivables or financing, the potential factoring is small, but if the definition covers general receivables, then there will be more business lines to finance.Factoring, as he added, is considered to be prospective, amongst four business lines that can be handled by financing companies.Based on the valid regulation, financing companies are allowed to work on four business lines, i.e. consumer financing, leasing, factoring and credit card. Amongst those segments, consumer financing still dominates.Through May, the amount of fund disbursed for consumer financing was IDR147.58 trillion, compared to total financing of IDR207.49 trillion. Total leasing was IDR55.99 trillion, while factoring was IDR3.02 trillion and credit card was IDR889 billion.In the draft of the revised regulation, the financial institution authority changes the tenor of factoring transaction into maximum 2 years.Extended tenorPT Indosurya Finance President Director Dennis Firmansjah viewed that the extended tenor in factoring could make the business of multifinancing companies diversified. In factoring transaction they may cover both 2-year receivables and escalated receivables of a project. It can be both, he saidThe extension of tenor from one year was aimed at expanding business lines of financing companies, said Ihsanudin.Association of Indonesian Financing Companies has proposed one key point in the revision of the regulation, i.e. refinancing, said Chairperson Wiwie Kurnia.The association has proposed that financing companies can offer refinancing to old customers and future customers, which means to general public.Refinancing transaction has been a gray area in multifinance business because of the missing regulation on the transaction. (t04/msw)

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