Statement from Akulaku on recent events in Indonesia and impact it has had on business

Comment by CEO of Akulaku, William Li for investors on Mintos:

“Dear investors on Mintos, 

We at Akulaku in Indonesia, pride ourselves on our responsible practices and work to promote financial well-being in the SouthEast Asia area. First, we have to admit that the COVID-19 pandemic and its influence on the Indonesia economy and financial industry is really beyond our expectations. 

Following the COVID-19 outbreak in China in late January 2020, the government of Indonesia issued a ban on all incoming flights from China by February 4 2020. Our countries business ties are very close therefore it made a significant impact on our economy. At that time, Akulaku performed slight controls over our business expansion in order to lessen the possible negative impact of such a ban, and overall I could say that the general situation in Indonesia was stable back in February 2020. However, by late February 2020 first COVID-19 cases started to appear also in Indonesia. Indonesia is still a developing country and the medical facilities are really weak, in comparison to many developed countries. Up until today, the COVID-19 cases have increased to around 5000+, and the government expects an even bigger outbreak in time to come. Meanwhile, the international oil pricing war among OPEC+ countries has tremendously hurt Indonesia’s oil exporting industry and left a footprint on currency value. While OPEC+, with help of US involvement, have finally agreed and the alliance sealed the largest ever coordinated crude oil production cut removing about a 10th of global supply, the process left a depreciation of Indonesia currency of about 20% in the last two months. 

By April 13 2020, the President of Indonesia Joko Widodo declared Indonesia is under a state of national disaster. Government is imposing quarantine and introducing extraordinary measures to protect our nation. The result of these measures is widespread economic disruption. Consumer financing industry has already suffered the initial consequences and is weak in the current situation.

The situation at Indonesia financial industry

The President of Indonesia is considering declaring a state of emergency and has already adopted a number of urgent steps to tackle the economic and social impact. Aimed at protecting people in a situation of economic downturn, the government has passed a recommendation to all finance organisations – OJK-S-9/D.05/2020 – to defer all consumer and business loans, as of April 9 2020. 

As a fully licenced financial institution in Indonesia, Akulaku follows the regulation from the local  Financial Services Authority. In addition to the economic slowdown and household income inevitable decrease, we expect that the volume of our non-performing loans will slightly increase. Considering the macroeconomic impact and regulation in place, we are facing a short-term liquidity challenge and we are working on it.

Late Pending Payments   

Due to the situation laid out above, Akulaku has experienced delays in debt collection service and international money transfers. This, in turn, has impacted our ability to meet settlement payments with Mintos and has increased pending payments volumes for investors on Mintos. We are working hard to improve and expect to meet our obligations by making weekly payments and buybacks to Mintos in order to cover currently accumulated pending payments which were due on March 31 and April 7 by the end of June 2020. Investors will also receive interest for any pending payments.

What to expect further on

In accordance with the new regulation, we provide loans free of late interest and its principal repayment schedule extension for the relevant period. These changes will impact those investors on Mintos who have invested in loans issued by Akulaku. A large portion of loans will be extended beyond their original schedule. We will continue to service these loans in line with the prolonged repayment schedules. The repayment amounts will be updated and, to avoid even larger pending sums, continue to be settled once a week with investors on Mintos.

Moreover, we will pay interest as normal (even when such interest is not received from the respective customers). This measure, together with more frequent payment settlements, will ensure that your investment will continue to generate its original interest income.

Once the government imposed measures are over, we expect our credit portfolio to return to its original schedule, and the buyback guarantee will remain in place for the delinquent loans.

We thank you for understanding. 

Yours faithfully, 

William Li


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