JAKARTA | The Financial Services Authority (OJK) hopes that the warehouse receipt system can be directed towards the capital market in the future to serve as a financing instrument through securitization. With this approach, Indonesia would become the first country to implement warehouse receipt securitization for the commodity sector.
"I think within the next 2-3 years, we will be able to implement this securitization," said OJK Chairman Muliaman D Hadad at the seminar "Enhancing Trust in the Warehouse Receipt System Through Guarantee Institutions," organized by Infobank in collaboration with Jamkrindo in Jakarta on Wednesday, June 1, 2016.
Muliaman stated that securitization is essential because the agricultural sector is often considered unbankable by banks, making it difficult for farmers to access financing from financial institutions.
This capital constraint is not only faced by the agricultural sector but also by other sectors, such as fisheries, which weakens their bargaining position when the harvest season arrives. He noted that although agriculture contributes only 14% to GDP, it remains a crucial sector, employing 38 million people or 31% of the workforce.
The warehouse receipt system itself is a document proving ownership of goods stored in a warehouse. Currently, ten commodities utilize the warehouse receipt system, which is seen as a solution to post-harvest challenges. This system has been widely adopted by developed and developing countries to support agricultural commodities, such as Malaysia, the Philippines, and Thailand.
"In Indonesia, the warehouse receipt system has not been fully optimized because public awareness still needs improvement," he explained. (Source: Infobank.com)