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Debt Problems

Before its downfall, eFishery said its business revolved around installing AI-driven smart fish feeders, sensors and automated supply chains that connected farmers to buyers via smartphone apps. It also helped farmers obtain financing from peer-to-peer lenders and financial institutions to pay for their feed and operational costs.

The company had claimed to have more than 400,000 fish feeders deployed, and investigators initially estimated the number was closer to 24,000. The current estimate is just 6,300, of which only 600 are sending back data, according to the presentation.

The investigators also found that there was a high default rate on the financing arrangements, and that eFishery bears all losses when farmers fail to repay their loans. “In theory, the proceeds from the harvest or cash collected from farmers should be repaid back to the lenders,” the presentation said. “In practice, however, eFishery faced significant challenges when it comes to collection from borrowers.”

Hampering the debt collection process were the huge distances and fragmented nature of Indonesia’s developing economy, where almost 10% of the population lives below the poverty line. About 76% of eFishery’s $68 million in accounts receivable were deemed as bad debt more than 60 days overdue, with the company ultimately liable for the bulk of loans it facilitated with banks, according to the presentation.

“Substantial costs would need to be incurred to realise or recover these outstanding amounts from borrowers who are scattered all across the country,” it said.

Manual Matching

The company’s fish and shrimp businesses were operating on thin margins and “severely loss making,” the presentation said. Key apps were not connected to eFishery’s accounting systems, and many farmers were manually matched with buyers, the investigators found.

Much of the advanced technology that the firm touted did not work as claimed, according to the presentation. None of eFishery’s PondTag sensors that were supposed to help remotely judge water quality and automate fish and shrimp feeders had been deployed. The limited data collection meant fish feed predictions were wrong almost half the time, the document said.

In essence, eFishery was “operating like a traditional trading business without technology,” the presentation said, noting that this helped explain the company’s large workforce of almost 2,600 employees at its peak in early 2024. Following mass job cuts since the start of this year, the company has roughly 200 staffers.

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