By Eko B. Supriyanto, Chairman of Infobank Media Group
“Give Me 10 Youths, I Will Undoubtedly Shake the World,” (Bung Karno)
These aphorisms from Soekarno about youth are full of wise and inspiring messages. This quote shows that a united youth can gather an extraordinary force that can change the world. However, the fact is that today many Millennials and Gen Z are trapped in the debt of online “loan sharks” or online loans (pinjol).
Gen Z and Millennials, in the next 10 years to 20 years will “die” civilly. The year 2045 – Golden Indonesia could be a nightmare. The demographic bonus is only a heavy burden for the country, and not a blessing. If not anticipated from now on, then Soekarno’s aphorism is just a nightmare. It will be a disaster because civilized mass “death” will occur.
Don’t be surprised. According to financial technology (fintech) statistics, the Financial Services Authority (OJK), as of June 2023, young borrowers aged 19 years to 34 years had a loan portion of Rp26.9 trillion. This is 57% of all loans disbursed by fintech from a total of Rp47 trillion. The number of accounts is almost 11 million. More surprisingly, children of high school age (SMA) or Gen Z (age 8-23 years) – under 19 years old have a loan balance of Rp169 billion.
That figure does not include portfolios from illegal pinjol – which will certainly add to individual loan portfolios. As always, loans are not always smooth. The bad loans of Gen Z and Millennials are worrisome. In percentage terms, their non-performing loans are already seven percent. Just look at the number of non-performing loans exceeding Rp1.9 trillion, and the bad loans reached Rp764 billion.
Roughly 770,000 young people, consisting of Gen Z and Millennials, are threatened with their future. If this continues, these young people will be civilly dead. This means that they will not be able to get loans from financial institutions, because they are blacklisted (SLIK) – formerly BI Checking.
Consumptive Lifestyle
There are many cases of young people being dragged into pinjol debt. Infobank Institute data recorded that in early September 2023, it was revealed that there were 58 students of Universitas Muhammadiyah Yogyakarta (UMY) who were trapped by pinjol and loan sharks. They use the money to finance their lifestyle. Traveling and hanging out at cafes.
In 2020, it was different, there were hundreds (116) of IPB students who were deceived by pinjol using fake data. These IPB students were deceived by someone to use their personal data to obtain loans from pinjol that they did not enjoy. Hundreds of IPB students were deceived. Almost the same thing happened to Ospek New Students (Maba) UIN Surakarta who were forced by their seniors to submit data, because this Fintech lending company sponsored Ospek Maba.
There are too many to tell about the student victims of pinjol. Finally, a UI student has killed his younger classmate. Shortcuts are taken because they are entangled in pinjol and chased by debt collectors in primitive ways.
In 2045, even if they have money, they will not be able to take out a loan to buy a house, or to buy a vehicle. Anyway, all forms of loan facilities. In fact, there is news that young people who enter SLIK will not be able to get a formal job. Let alone working in a financial institution, such as a bank. Madesu, the future is bleak for those who enter SLIK, because civilly it is “dead”.
There are many reasons why bad credit occurs. It could be that these young people are tempted by a consumptive culture. A lifestyle of hedonism. They want to look good, and do not understand that the loan must be returned, even though it is unsecured. Even worse, borrowing to buy consumptive goods, rah-rah and even to buy concert tickets.
And, it happened , when the stock market was booming, many of these young people borrowed online to play stocks. These days, it makes you shake your head to play online gambling or online games. It’s worrying that the lifestyle of most millennial children today is precarious. They want to get rich quickly, but don’t understand that loans are used as a shortcut to finance their lifestyle.
On the same side, pinjol is attacking young people through social media. Almost all YouTube channels are crammed with pinjol advertisements. The terms are light and easy. The content is not a little misleading. Just click, immediately liquid. Legal or illegal, all of them offer easy loans. Whether you can pay or not, it doesn’t seem to matter too much.
In a discussion conducted by the Infobank Institute, some of these pinjol are deliberately looking for as many borrowers as possible. This is done because the more borrower data, the more expensive the valuation will be when it is sold. Before the “winter” season comes, the “idol” of these fintechs is none other than valuation.
So, spreading money around is not a problem. Count the cost of promotion and attracting debtor data. The young people who manage P2P fintech do not “understand” that if you throw credit it must be returned. They are worshipers of the “idol” of valuation. They are not like bankers, who breathe carefully.
In fact, according to the authorities, these pinjol have an extension as “money laundering” through pinjol. “So, just 30 percent of the capital disbursed is already profitable, because dirty money from China immediately becomes holy money again, becomes clean money and safely enters the banking system,” said a law enforcer.
And, indications of money laundering are not nonsense. Some of the illegal loan sharks have become an extension of being a “laundry” for money. These pinjol spread money everywhere, including to Gen Z whose age is between 18 and 23 years old. This is proof of the “inconsequentiality” of these online loan sharks.
That could be why the interest rates are so high. Some are 1%, and later corrected to 0.8% a day. Or, a month 24% and a year 288%. Now the Indonesian Joint Funding Fintech Association (AFPI) emphasizes that the interest rate is no longer 0.8% a day. However, it is proposed between 0.4% and 0.6%. Or, let’s say it becomes 0.4% a day, then a month is still 12%, and a year 144%. Still big.
Therefore, OJK must correct this total fintech interest rate. This is because the interest rate of 0.4% per day is still relatively high. Must be forced even lower. Moreover, interest is interest-bearing. In fact, the principal installments can be higher than the interest burden. Plus fines if in arrears. It is not wrong if pinjol is called an online “loan shark”. If necessary, moratorium on P2P lending licenses, and conduct a fit and proper test for the management and owners. Especially now, the era of burning money is over, so pinjol is blindly collecting bad debts.
And, because of that, OJK needs to limit the “brutal” movement of these P2P fintechs, because many victims have fallen. The fact is that Gen Z and Millennial children have a burden that is not small because of this online “loan shark”. It must be admitted, OJK has also cleared a lot of illegal pinjol. Last week OJK closed 288 illegal pinjol and 15 digital loans through the Facebook platform.
No exaggeration, although OJK has been strict in supervising existing P2P lending, it needs to tighten fintech licenses that are present in the name of financial inclusion. On the bright side, fintech in Indonesia may accelerate financial inclusion. People can more easily access finance with the presence of fintech. However, fintechs that are present in the midst of society must also have the responsibility to educate the public. Not only spreading the net of consumptive loans, but also productive loans. The managers of pinjol must be in a fit and proper test of banker quality.
Meanwhile, licenses for fintech are relatively easy. Unlike banks, which must go through rigorous selection. Long-winded requirements. Must go through bank health, minimum capital, how many KBMI groups are included, and adequate infrastructure. Also, risk management factors as well as IT and human resources.
The licensing of digital lending services in banks should be made easier. There is a difference in the treatment of digital lending services between fintechs and banks. The licenses for banks are more demanding than those for fintechs. It’s good that banks are also given convenience in this digital lending license. Moreover, these banks have better governance. Until now, there is an assumption that BI is easier to grant fintech payment system licenses than if banks request licenses.
Do not let the rampant presence of fintech with consumptive credit offers be a disaster for Gen Z and Millennials in the coming years. The responsibility for literacy does not rest solely on OJK’s shoulders. It must also be recognized, OJK has done a lot of literacy which is also massive. In fact, OJK has long entered campuses to socialize literacy programs. Many educational programs for the community have been carried out by OJK recently and more massively.
It is time for OJK not to be left alone. It must be strengthened and supported, including by the local government (pemda) with the Family Welfare Development (PKK). Also, it must be done in schools through government programs in the Ministry of Education, Culture, Research and Technology, in the mass media, including political officials to participate in talking about financial education.
Bank Indonesia (BI) must also participate in educating the public about financial literacy. Moreover, most of the cybercrime that occurs in Indonesia, if not 100%, is done through BI-Fast. So far, it seems that only OJK has been actively talking and socializing this literacy.
Also, programs from the Ministry of Communication and Information Technology must touch on educating the public about financial planning. According to the OJK Literacy survey, in 2022 the level of public literacy is still 49.68%. Meanwhile, the inclusion rate reached 85.10%. There is a wide gap that will cause complications. This is because people buy financial products without understanding the product. Like buying a cat in a sack.
P2P Lending Movement Restricted
Not easy, but not impossible. Admittedly, the hardest thing about managing finances – when there is no money. The glitz and glamor shown on television screens has hypnotized young people to be pragmatic. How to get rich quick. Consumptive. In fact, behind the loan there is an obligation to return.
Generation Z and Millennials need to be saved for the future. Do not let these young people experience civil “death” in the future. Being included in the OJK blacklist is terrible. Besides not being able to get credit from banks, whether for mortgages, car loans, or other credit facilities.
Don’t take it lightly. Therefore, buy what you need and not what you want. If you want to save Gen Z and Millennials from civil “death” in the future, then the space for fintech must be limited. One way is to lower the interest rate so that it is no longer attractive to fintech. But, it is indeed this illegal pinjol that is troubling. One dead grows a thousand. It is difficult, even though thousands have been closed, they still “change clothes”.
For Indonesia, where 1 in 2 of the population is the younger generation, saving these young people is mandatory. They must be saved. So, the responsibility of education is not only on the shoulders of OJK, but all of us, including the online “moneylenders” themselves – who play a big role in blacklisting young people so brutally.
If Gen Z and Millennials don’t pay back their loans, it may not be because of their behavior. But, these young people are straying down the path of consumerism that surrounds their lives through the screen of a smartphone. They don’t know that in 10 or 20 years the catastrophe of blacklisting will make a grave for their civil “death”.
Don’t let Gen Z and Millennials be threatened with civil “death” because of the debt trap of online “loan sharks” which could now be Indonesia entering an “emergency” loan shark. It is rampant in offering the convenience of borrowing money – the fact is that these young people are also stuck, and have the potential to get stuck, as many sad stories of students who are entangled in this pinjol.
Save Gen Z and Millennials from the debt trap of pinjol. It’s time to be disciplined while continuing to educate the public about financial planning. I wonder if Soekarno lives in the present by looking at the victims of pinjol, most of whom are young people, women and teachers at a more mature level.
Don’t borrow to finance your lifestyle. Buy what you need, and don’t buy what you want. It’s dangerous. Because, the digital “tuyul-tuyul” is running around that will close your future ahead. And, the presidential candidates should join the conversation about the debt disaster of these young people, because of lifestyle, or because of structural poverty which is then offered ease of debt?
