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Flag of Indonesia
System of government: presidential republic
Population: 256 million
Currency: Indonesian rupiah (IDR)
FX regime: free float
GDP: $851bn (2014 est)
IGTA member: no
FATF member: no
Other professional financial/banking associations:

Indonesian Banks Association,

ASEAN Bankers Association,

Financial regulatory framework

Bank supervision

Banks are supervised by the central bank – Bank Indonesia.

Exchange controls

The official currency of Indonesia is the Indonesia rupiah (IDR) whose value is determined by a floating exchange rate. Domestic banks may only offer forward contracts against IDR to non-residents up to a maximum value of US$1m, unless there is some underlying investment activity. Indonesia applies some exchange controls. For transactions is conducted within Indonesia, payment must be received in domestic currency, with the exception of certain transactions such as servicing debt, purchasing from overseas and international trade transactions. Foreign currency may only be transferred to a non-resident entity or abroad if it is supported by an underlying economic transaction. Foreign currency purchased against the rupiah must be supported by an underlying economic transaction if it exceeds US$100,000 per month. The import and export of domestic currency with a value in excess of IDR100m must be accompanied by a customs declaration and Bank Indonesia approval. Exporters in Indonesia must receive export proceeds through a foreign exchange bank. Direct investment is also subject to controls. Inward direct investment in areas including power generation, transmission and distribution, oil and gas, toll-road operation and drinking water operation must be made by joint venture companies, with at least 5% Indonesian ownership. Foreign direct investment in banks is limited to 99%. Foreign investors in other sectors can be via a 100% foreign-owned entity.

Taxation framework

Corporate taxation

Resident companies are taxed on their worldwide income. Non-resident companies are only taxed on their Indonesian-sourced income. As from 1 July 2013, a corporate taxpayer (other than a PE) that earns or receives gross income that does not exceed IDR 4.8 billion within a fiscal year is subject to a reduced corporate income tax of 1% of gross income. Resident corporate taxpayers with gross revenue between IDR 4.8 billion and IDR 50 billion receive a 50% reduction in the corporate tax rate imposed on the taxable income for gross revenue up to IDR 4.8 billion.

Tax on interest and dividends

Withholding tax of 15% for residents (banks are exempt from withholding tax on interest payments) and 20% for non-residents is levied on interest and dividends, subject to tax treaties.

Thin capitalisation

Indonesia has no specific tax regulation on thin capitalisation. The general law authorises the Ministry of Finance to determine the debt-to-equity ratio of companies for tax calculation purposes.

Transfer pricing

Transactions between parties that have a special relationship must be carried out in a ‘commercially justifiable way’ and on an arm’s length basis. Documentation is required, which should at least include an overview of the taxpayer’s business operations and structure, its transfer pricing policy, a comparability analysis, selected comparables and an explanation of how the arm’s length price or profit was determined (including the transfer pricing methodology). The Indonesian tax authorities have issued detailed transfer pricing guidelines, which, in principle, are in line with the OECD’s approach.

Capital gains tax

Capital gains are taxable as ordinary income and capital losses are tax-deductible. Gains from certain transactions are taxed under a special regime (e.g. gains from the disposal of land and/or buildings are subject to a final tax of 5% of the transaction value).

Sales taxes/VAT

VAT at a rate of 10% is levied on the sale of taxable goods and services. Imports are subject to VAT and exports of taxable goods are zero rated. A number of goods (such as basic necessities) and services (including food served in restaurants, healthcare, financial services and hotels) are exempt from VAT. In addition to VAT, some goods are subject to a luxury sales goods tax (LST) at rates of 10% to 75%.

Tax information provided by Deloitte Touche Tohmatsu and Deloitte Highlight 2015

Banking service provision

There are 120 commercial banks in Indonesia (four state-owned commercial banks, 79 private national banks, 26 government regional banks and 11 private Islamic commercial banks). Since 1999 Indonesia has opened up its financial sector to foreign banks in order to recapitalise some domestic banks and both foreign and domestic entities are now permitted to purchase up to 99% of a domestic bank’s shares. Foreign banks have purchased a number of domestic banks and around 50% of all banking assets in Indonesia are now foreign-owned.

Clearing and payment systems

Clearing systems

Indonesia has two main payment clearing systems:

  • BI-RTGS, Indonesia’s real-time gross settlement system; and
  • SKNBI, the Bank Indonesia National Clearing System.

All electronic payments with a value of IDR 100 million and above must be processed through BI-RTGS, although there is no minimum payment threshold. Other electronic payments are processed through the Credit Clearing element of SKNBI. Paper-based payments are processed through the debit clearing element of SKNBI.

  • BI-RTGS – the BI-RTGS system, Indonesia’s real-time gross settlement (RTGS) system, is operated by Bank Indonesia. It processes large-value (equal to or above IDR 100 million) and urgent interbank payments denominated in IDR. All banks operating in Indonesia are members of the system. Users access the system via dedicated terminals. During 2011 BI-RTGS was upgraded, with a direct debit module added to process direct debits automatically in real-time between banks.
  • SKNBI – the National Clearing System (SKNBI), operated by Bank Indonesia, processes all low-value (below IDR 100 million) electronic and paper-based payments.

There are two sub-systems in SKNBI. Debit clearing processes all interbank paper-based debit transfers, including cheques and bilyet giro. Credit clearing processes all low-value electronic credit transfers.


The credit transfer is the most important cashless payment method in Indonesia in terms of value. It is the dominant form of payment used by large companies to make supplier, tax or salary payments or for treasury operations. Cheques and bilyet giros are primarily used by companies. They are not a common payment method among individuals.

  • Credit transfers – the credit transfer is the dominant form of payment used by companies in Indonesia, whether to make supplier, tax or salary payments or for treasury operations. The majority of credit transfers are effected electronically and the popularity of electronic transfers continues to grow as the clearing systems are developed.
  • Direct debits – direct debits are available for making regular payments, such as utility and mortgage payments. Because there is no standard direct debit scheme in Indonesia, direct debit schemes need to be arranged on a bilateral basis between the payer’s and the beneficiary’s bank.
  • Payment cards – there were approximately 124.7 million payment cards in circulation at mid-2015, 22.1% more than at the same point in mid-2014.

Debit cards with an ATM function are currently the most common type of cards; the 101.1 million debit cards accounted for 81.1% of all cards as of mid-2015. However, credit card use is increasing rapidly, with 16.1 million cards in circulation in mid-2015. There are currently 60 banks issuing debit cards, 23 banks issuing credit cards and 111 banks issuing ATM cards in Indonesia. A local software company, PT Artajasa has implemented a Shared ATM network in Indonesia, in which 87 local banks participate.

  • Cheques and bilyet giros – cheques are primarily used by companies. They are not a common payment method amongst individuals. Cheques must be presented for payment within 70 days of issue. Cheques are sometimes post-dated to allow the issuer to delay payment.

Bilyet giros are similar to cheques, except they cannot be exchanged for cash.

  • Postal instruments – postal money orders are also available and can be used by people without access to a bank account to transfer funds.
  • Electronic money – the use of electronic money (e-money) schemes, in the form of prepaid cards, is growing rapidly in Indonesia, especially for high-frequency retail payments.

There are currently 19 e-money providers, including nine banks and eleven non-bank financial institutions. At the end of 2013, there were approximately 36.2 million e-money cards in circulation, up 5.6% from 2012.

  • Cross border – cross-border transactions are usually settled via SWIFT-based links to correspondent banks. All the major banks have direct SWIFT connections. Supporting documentation is required in most instances.

Cash and bank account management

Account availability

Residents can open and maintain foreign currency accounts domestically and abroad. Domestic currency (IDR) denominated accounts are convertible into foreign currency. Non-residents are only able to open and maintain foreign exchange accounts if they are checking, savings or time deposit accounts. Non-resident domestic currency (IDR) denominated accounts are convertible into foreign currency. Cheques cannot be drawn on resident or non-resident foreign currency accounts. Interest can be paid on current accounts, whether they are held by residents or non-residents. Short-term and demand deposit accounts, denominated in both domestic and foreign currency are available to both residents and non-residents.

Money laundering

Indonesia has implemented anti-money laundering legislation (Law No 15 of 2002 Concerning Money Laundering Criminal Acts amended in 2003, Law No 1 of 2002 on Eradication of Terrorism, Law No 1 of 2006 on Mutual Legal Assistance; Law No. 8 of 2010 Concerning the Prevention and Eradication of the Crime of Money Laundering; Law on Amendment of Article 3, Article 29 and Article 30 of the Law on Anti-Money Laundering and Combating Financing of Terrorism 2013 and Sub-Decree on Freezing of Property of Designated Terrorists and Organisations 2014). Further legislation has been drafted. In addition, a number of Ministry of Finance decrees and Bank of Indonesia regulations have been issued, including the Regulation Concerning the Implementation of Anti-Money Laundering and Combatting the Financing of Terrorism Programme for Commercial Banks 2009. Indonesia is a member of the Asia Pacific Group on Money Laundering (APG). In February 2010, having been identified by the Financial Action Task Force (FATF) as having strategic AML/CFT deficiencies, Indonesia made a “high-level political commitment” to work with the FATF to address these issues. According to the FATF statement of October 2014, Indonesia had 'taken steps towards implementing its terrorist asset-freezing regime’ but Indonesia had 'not made sufficient progress in implementing its agreed action plan within the agreed timelines and certain key CFT deficiencies remain'. Indonesia has established a financial intelligence unit (FIU), the Indonesian Financial Transaction Reports and Analysis Centre (PPATK), which is a member of the Egmont Group.

Information supplied by BCL Burton Copeland ( Data as at February 2015.

Cash concentration

Cash concentration is a liquidity management capability whereby account balances are physically transferred to/from a single account (known as a master, header or concentration account) for liquidity management purposes. Cash concentration can take these forms:

  • Zero balancing (ZBA) – sometimes referred to as sweeping, zero balancing is a cash concentration capability whereby the total of all account balances is physically transferred into a nominated account.
  • Target balancing – also known as sweeping, target balancing is a cash concentration capability similar to ZBA, whereby all account balances are physically transferred into a nominated account leaving a predetermined amount in the sub-accounts.
  • Threshold balancing – a cash concentration capability similar to ZBA, whereby the balances of the sub-accounts are physically transferred in their totality into a nominated account each time the sub-account balances reach a predetermined threshold.

For residents cash concentration, and zero balancing in particular, is offered by a number of cash management banks in Indonesia. Non-resident entities are not permitted to borrow funds in Indonesia, so they cannot participate in a cash concentration structure.

Cross border sweeping

Cross border sweeping is available to residents in Indonesia.

Notional pooling

Notional pooling is available from a number of international cash management banks operating in Indonesia. Non-resident entities are not permitted to borrow funds in Indonesia, so they cannot participate in a cash pooling structure.

Electronic banking

Electronic banking is becoming more widely used in Indonesia, with most banks offering electronic banking services to their corporate clients. There is no bank-independent standard. Some banks offer a form of internet banking, although this is not yet widely used, because of the weakness of Indonesia’s broadband network.

Liquidity management

For excess liquidity, investment products include interest bearing current accounts, call and time deposits in local and foreign currency, marketable securities such as central bank certificates, corporate bonds and government bonds.

Corporate finance

Foreign firms generally raise funds outside the country and tend to use the local branches of home-country banks for cash management and local short-term investments. The Jakarta Stock Exchange and the Surabay Stock Exchange were merged to form the Indonesia Stock exchange in October 2007.


Government website

Bank Indonesia

Ministry of Finance

Capital Market Supervisory Agency

Ministry of Trade

Statistics Indonesia

Directorate General of Taxes

Indonesia Stock Exchange

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