GL expanding to Indonesia
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GROUP LEASE, a motorcycle-leasing firm, is setting up a company in Indonesia to spearhead its expansion into the huge and relatively untapped retail finance and leasing markets in the largest Asean country with a population of more than 250 million.
J Trust Finance Indonesia is a 65:20:15 joint venture of Group Lease Holdings, its subsidiary in Singapore; J Trust Asia, a subsidiary of J Trust Group, which is GL’s strategic partner; and Wijaya Infrastruktur Indo-nesia, a local partner in Indonesia.
Its filing to the Stock Exchange of Thailand yesterday said the joint venture would have registered capital of about US$7 million (Bt245 million).
Mitsuji Konoshita, chairman and chief executive officer of Group Lease, said the company would tap the 62 branches of J Trust Bank, an Indonesian bank owned by J Trust Group, to facilitate and support its entry to the Indonesian market. J Trust recently subscribed to $30 million worth of convertible debentures issued by the company.
The leasing business will cover motorcycles, farm equipment, solar panels and electrical appliances.
The registration process is expected to be completed within a few months so that the joint venture can start doing business this year.
After Group Lease’s successful operations in Cambodia and the recent commencement of business in Laos, the entry into Indonesia marks another major step in the Thailand-based group’s regional expansion, it said. Its corporate vision is to become the leading Asean regional finance company within five years.
It has reported record second-quarter profit of Bt129.47 million, an astronomical jump of 1,765 per cent from the same quarter last year.
Besides lower provisions for bad and doubtful debts that were in line with the country’s economic recovery, larger contributions were made by Cambodia.
The portfolio in Cambodia, comprising Honda motorcycles and Kubota farm equipment, is expected to double from $45 million at the end of June to between $80 million and $100 million by year-end and then to more than double to $250 million next year.
The portfolio for Thailand will rise by just about 10 per cent from around Bt5 billion currently to Bt5.5 billion over the same period.
“The growth potential in Cambodia is huge,” Konoshita said. “And the growth is coming from the rural countryside where 80 per cent of our clients are based.
“We have seen a great deal of rural development in recent years – new roads, construction, housing – which has created a whole new generation of consumers with new purchasing power, which we have never seen before.”
These new countryside consumers represent a huge market untouched by the company’s competitors, which are more focused in cities and other urban areas.
GL Finance, Group Lease’s wholly owned subsidiary in Cambodia, has emerged as the dominant player with about 95 per cent of the market. These rural markets are relatively insulated from the current global financial volatility.
Equipped with an efficient e-finance system that substantially shortens the credit analysis of customers, the company is now using the successful model developed in Cambodia for Laos and will introduce it in Indonesia.
While Thailand will continue to be the company’s base, regional operations are expected to make much larger contributions to group revenues and profits.
Cambodia will match Thailand’s profits this quarter and surpass them next quarter.
