Alibaba-backed Indonesian multifinance fintech Akulaku planning Islamic roll-out

JAKARTA – Indonesian online multifinance services company Akulaku will launch its Shariah-compliant platform in the first half of 2021, Efrinal Sinaga its president director told Salaam Gateway.

Akulaku in January raised $100 million in Series D funding from investors including Alibaba’s financial services arm Ant Financial. The Jakarta-based fintech is a leading online multifinance provider in Indonesia and is widely valued at around $450 million.  

It now wants to enter the Islamic sector with Akulaku Syariah to tap into local demand.

“Also, we see our competitors moving in this direction," said Efrinal.

He estimates the preparation and process of working towards a Shariah-compliant non-bank financial institution license will take a year, involving the development of IT infrastructure, operational systems, business processes, partnering with Islamic banks, getting approval from the national-level fatwa body DSN-MUI, and appointing a Shariah supervisory board.  

"All these take time and we'll process them in 2020. In sha Allah in the first half of 2021 we will already have an Akulaku Syariah version,” said Efrinal.

He said the company has already registered its intention with the financial services authority (OJK) through its annual business plan.

The company is also seeing a trend of conventional banks becoming Shariah-compliant, such as Bank Aceh, Bank Nagari in West Sumatra, and Bank NTB, and wants to ensure it is properly positioned in specific regions to serve their markets.

“If we don’t prepare to enter the Shariah P2P lending market from now, we'll be too late,” said Efrinal referring specifically to Aceh and West Sumatra.

Akulaku disbursed around 4 trillion rupiah ($285.34 million) in loans during January-October this year and announced on Dec 12 that it wants to raise offshore financing to help it reach its target of 6 trillion rupiah next year. 

Efrinal said he has already secured approval from Akulaku’s shareholders to launch Akulaku Syariah.

“We are also looking to the Financial Services Authority’s (OJK) plans to relax the spin-off deadline regarding Islamic banking units (UUS) to become full Islamic banks,” said Efrinal.

Authorities are currently reviewing OJK regulation number 31/2014 on Shariah-compliant financing and the central bank's Islamic banking law number 21/2008 on the matter of making it compulsory for Islamic banking units (UUS) to become standalone institutions by 2023.

“This matters because we plan to partner with Islamic banks and other financial institutions," added Efrinal.

Efrinal himself is familiar with Islamic financial products. In August 2007, he created PT Al-Ijarah Indonesia Finance, an advisory and Islamic multifinance company that secured 105 billion rupiah from three investors Bank Muamalat Indonesia, Bank Boubyan Kuwait, and Bahrain’s Alpha Lease and Finance Holding BSC. Al-Ijarah Indonesia Finance offers working capital financing of 2 billion rupiah minimum to each borrower. 

"I've been running my own Shariah financing platform since 2007, so I understand the market and its players," said Efrinal. 

Akulaku started in 2014 with virtual credit cards and moved into providing services for a range of virtual payments, from phone and mobile top-ups to utilities bills. It now also offers P2P lending, financing, and e-commerce in Indonesia, and also has a presence in the Philippines, Vietnam, and Malaysia.

(Reporting by Yosi Winosa; Editing by Emmy Abdul Alim [email protected])

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