About Indonesia

Indonesia is Southeast Asia's largest economy and a manufacturing hub for the region. The country is viewed as an evolving local financial centre for the Southeast Asia markets. Foreign exchange controls in Indonesia make it advantageous for companies with significant operations there to have a base in the country.

The Indonesian government has introduced a series of economic reforms that ease foreign ownership of businesses. The country has become a sought-after destination for Chinese firms to locate their businesses, as their own market becomes increasingly saturated. Indonesia is also an important component of the Belt and Road initiative, given its strategic location in Asia Pacific.

China is now the second largest investor in Indonesia after Singapore, and it is looking to divert excess manufacturing capacity offshore to Indonesia, further reinforcing the island nation’s status as a manufacturing hub..


Indonesia Market Profile Infographic_small


What solutions are available in Indonesia?

Solution Description
Interest Optimisation Maximise your interest yield from for your balances held with the bank.

Corporate Treasury in Indonesia

Indonesia is Southeast Asia's largest economy and a manufacturing hub for the region. Here, we highlight some of the key benefits relevant to treasury and cash management in Indonesia.


Financial Market Development

  • The World Economic Forum ranks Indonesia 52nd in the world for its financial system in The Global Competitiveness Report 2018.
  • The report also states that the country is ranked 72nd for the soundness of its banks, although it came 23rd for its banks’ regulatory capital ratios. It was rated in the top 25 for both venture capital availability and financing to SMEs.
  • The financial sector is developing, but ongoing deregulation in a number of industries is boosting the banking sector and increasing the attractiveness of investing in Indonesia. Margins in the sector are high and banking penetration is low, although the country has one of the fastest rates for the take up of digital banking services in the region.
  • Indonesia has a developing Islamic finance subsector, with 14 Islamic commercial banks that, along with the 20 Shariah business units of conventional banks, had assets of IDR 479,820 billion at the end March of 2019.
  • BKPM, the Investment Coordinating Board of the Republic of Indonesia, is the primary interface between business and government, and aims to boost domestic and foreign direct investment through creating a conducive investment climate.


Sophistication of Banking Systems

  • There are 114 banks in Indonesia, including 63 commercial banks and four state-owned banks, as well as nine foreign banks. The four largest banks, three of which are state-controlled, dominate the sector.
  • Indonesia's Financial Services Authority (OJK) has recently introduced measures to accelerate consolidation in the sector, with the aim of reducing the number of banks to 60-70 within 10 to 15 years.
  • Indonesia has both government and corporate bonds. Outstanding local currency bonds totalled IRD3,083.7 trillion at the end of March 2019.
  • Indonesia has some foreign exchange controls restricting the movement of rupiah from banks within Indonesia to offshore banks. All domestic transactions must be carried out in rupiah, although there are some exemptions for foreign firms. Only authorised banks can carry out foreign trade-related exchange operations. There are no restrictions for borrowing foreign currency from offshore banks, but local companies are subject to hedging requirements. Underlying documentation is needed for outgoing foreign currency transfers of more than USD100,000.


Regulatory Bodies

  • Indonesia's Financial Services Authority regulates the banking sector. It is committed to adopting international regulatory standards. Bank Indonesia (BI) is responsible for maintaining the stability of the rupiah.
  • Bank Indonesia is the central bank.



  • The corporate income tax (CIT) is 25%. The standard CIT rate is reduced
    • by 5% for public listed companies subject to fulfilment of the various conditions set;
    • by 50% for small companies (i.e. annual turnover of no more than IDR50 billion) which is imposed proportionately on taxable income on the part of gross turnover up to IDR4.8 billion.
  • Resident companies are taxed on worldwide income. Foreign companies with permanent establishments in Indonesia are generally taxed in the same manner as resident companies.
  • Interest income received by a resident company (not a bank operating in Indonesia or government-approved pension fund) from
    • time or saving deposits and on Bank of Indonesia certificates is subject to a final income tax of 20%;
    • interest on bonds is subject to a final income tax of 15%
  • Proceeds from the sale of shares on Indonesian stock exchanges are subject to a final income tax of 0.1% if certain conditions are met.
  • Income tax concessions of 100% of CIT for five to 20 years are available for companies in certain pioneer industries provided they meet certain criteria. CIT reductions are also available to companies operating in Special Economic Zones and Industrial Zones that meet the criteria set.
  • The standard rate for Value Added Tax (VAT) is 10%. The export of goods and some services is zero-rated.
  • Stamp duty is payable as a fixed amount of either IDR6,000 or IDR3,000 depending on the type of documents.
  • Interest expenses that are used for business purposes are generally tax deductible although a certain portion of interest arising from debt is non-tax deductible if the debt to equity ratio exceeds 4:1. Exceptions apply for certain industries.
  • Capital gains are generally assessed with ordinary income and subject to CIT.
  • Withholding tax of 20% (or a reduced rate as per the tax treaty if available) is charged on branch profits, regardless of whether they are remitted.
  • Withholding tax of 15% is charged on dividends and interest for resident companies.
  • Withholding tax on dividends and interest paid to non-resident companies are between 5% and 20% on dividends and 5% and 15% on interest where a tax treaty is in place and if the non-resident can produce a Certificate of Residence, and 20% if there is no tax treaty.
  • Indonesia has tax treaties with nearly 70 countries and territories.
  • Indonesia is a signatory to the Organisation for Economic Co-operation and Development’s Multilateral Competent Authority Agreement, through which information is exchanged between tax administrations, to provide a single, global picture on some key indicators of economic activity within multinational enterprises.


Benefits for Local Treasury

  • Foreign-exchange controls in Indonesia make it advantageous for companies with significant operations there to have a base in the country.
  • Jakarta is viewed as an evolving local financial centre, with the potential to become a regional hub for Southeast Asia.
  • Macroeconomic stability is improving but Indonesia continues to experience significant currency volatility.
  • For resident companies, cash concentration, particularly through zero balancing, is offered by a number of cash management banks in Indonesia. Cross-border sweeping in FCY subject to it fulfilling the conditions laid out and notional pooling is also available to resident companies.


Login to Treasury Prism banner





Banking System

  • State-run banks dominate Indonesia's banking sector, with three of the four main banks being majority state-controlled: Bank Mandiri, Bank Rakyat Indonesia and Bank Negara Indonesia. The fourth main bank is Bank Central Asia, which is privately owned. There are plans underway to form a holding company to manage the four state-run banks (Bank Tabungan Negara is the fourth state-run bank).
  • There are a total of 114 banks in Indonesia, of which the majority are commercial, four are state-owned, and nine are foreign-owned. There are also 14 Sharia commercial banks and over 1,500 rural banks spread across the archipelago.
  • Indonesia's Financial Services Authority (OJK) has recently introduced measures to accelerate consolidation in the sector, with the aim of reducing the number of banks to 60-70 within 10 to 15 years.
  • Islamic banking has an increasing presence in the banking sector, with 14 Islamic banks and 20 banking units within regular banks. Islamic banking accounted for 5.9% of the banking sector’s total assets in early 2019. There are plans to merge the Islamic banking units of the four state-run banks and establish one Shariah-compliant bank.
  • There are restrictions on foreign banks opening in Indonesia, and only the top 200 banks in terms of assets are permitted to have a presence. Despite this, foreign banks do have an active role in the banking sector.


Bank Accounts

  • Residents may hold foreign-exchange accounts domestically and overseas. However, they are not permitted to hold domestic currency (IDR) accounts overseas, although local IDR accounts can be converted to foreign exchange.
  • Non-residents may hold foreign-exchange and IDR accounts, and foreign currency is freely convertible. Non-residents may only hold current, savings and time deposit accounts that are subject to the bank’s commercial offshore borrowing limit. A non-resident is only permitted to receive a transfer in IDR for an economic transaction and must have underlying documentation to support it. Overdraft facilities are not available to non-residents.


Legal and Regulatory

  • The Financial Service Authority, Otoritas Jasa Keuangan (OJK), supervises the banking sector.
  • A company incorporated or domiciled in Indonesia is considered a resident company.
  • Indonesia has anti-money laundering and counter-terrorism legislation in place, is a member of the Asia/Pacific Group on Money Laundering (APG) and has a financial intelligence unit, the Indonesian Financial Transaction Reports and Analysis Centre (PPATK), which is a member of the Egmont Group.
  • Indonesia is a member of the Association of Southeast Asian Nations (ASEAN).




Payment Systems



Indonesia's national interbank real-time gross settlement (RTGS) system


  • Used for high-value (more than IDR100 million) and urgent IDR-denominated interbank transfers.
  • Operated by Bank Indonesia.
  • Final settlement done in real time across participant banks' accounts with Bank Indonesia.
  • Effects final settlement of net balances originating from the BI-RTGS.




Indonesia's national automated clearing system

  • Used for low-value (less than IDR 500 million, increasing to IDR 1billion on 1 September 2019), non-urgent and bulk interbank transfers and paper-based transactions.
  • Operated by Bank Indonesia.
  • Divided into Credit Clearing (low-value credit transfers) and Debit Clearing (paper-based payments; e.g. direct debits and cheques).
  • Final settlement done via SKNBI across participant banks’ accounts with Bank Indonesia same or next working day.


National Payment Gateway (NPG)

(Gerbang Pembayaran Nasional (GPN))
Indonesia’s national electronic payment system
  • Regulated by Bank Indonesia.
  • NPG regulation has already taken effect and has been implemented for payment instruments including  ATM/Debit card.



Payment Instruments


Credit Transfers

  • High-value (more than IDR100 million) and urgent credit transfers are settled via BI–RTGS same day. Larger sums (but less than IDR500 million, increasing to IDR1 billion on 1 September 2019) may be settled via SKNBI Credit Clearing.
  • Low-value (less than IDR500 million, increasing to IDR1 billion on 1 September 2019) and bulk credit transfers are settled via SKNBI Credit Clearing on the same working day (5 batches a day, increasing to 9 batches a day on 1 September 2019).


Direct Debits (auto debits)

  • Available when the sender and receiver have accounts with the same bank.
  • For interbank transactions, BI has launched a direct debit service that allows transactions across participant banks.



Card Payments

  • Debit cards are becoming increasingly common, although payment cards have low usage, limited by low adoption of card readers by retailers.
  • Debit cards are issued by 67 banks, credit cards by 25 banks and ATM cards by 113 banks.
  • It is common to make online payments through bank transfers using ATMs.
  • There is limited circulation of credit cards and usage is low, constituting one-fifth of online payments (
  • Visa, MasterCard and JCB International are the main brands of credit cards used, and all are Europay, Mastercard and Visa (EMV)-compliant.
  • There are three domestic ATM networks (ATM Bersama, Prima and JPN[Jalin Pembayaran Nasional] and ALTO) and two international ATM networks (Cirrus and Plus).
  • There are four POS networks in use: Visa, MasterCard, Debit BCA network and Kartuku.
  • Electronic money schemes are in use through top-up, prepaid cards.


Online Payments

  • Financial technology (fintech) has been slow to be adopted in Indonesia, due to a combination of factors, including: a lack of financial infrastructure, bureaucratic and regulatory obstacles, and bank accounts being limited to a small proportion of the population. 
  • ATM transfers and online banking are the most common forms of digital payments. 
  • Mobile banking is available, but uptake is low, despite the high rate of mobile phone adoption. This is largely due to the fact that a low proportion of Indonesians have bank accounts. However, mobile banking is forecast to grow in future.
  • Reloadable mobile wallets are a popular form of cashless payment for retail and low-value payments. Ovo and Go-Pay are the most popular brands of mobile wallet.
  • DANA is a digital wallet launched in 2018 by one of Indonesia’s most popular chat apps, Blackberry Messenger (BBM). BBM is also available on Android and iPhone.


Digital Currencies

  • Although cryptocurrencies are not legal tender in Indonesia, the country has a thriving bitcoin market.
  • The Trade Ministry’s Futures Exchange Supervisory Board (Bappebti) has declared that cryptocurrencies can be considered commodities, and the government is now in the process of formulating regulations regarding exchanges, taxation and crime prevention.


Cheques, Cash and Money Orders

  • Common form of cashless payment, especially in commercial transactions.
  • Bilyet giros can be used (not exchangeable for cash).
  • Must be presented within 70 days of issue by authorised party.
  • Bilyet giros and cheques are cleared via SKNBI Debit Clearing with maximum limit of IDR500 million (per bilyet giros / cheques) and final settlement via BI–RTGS next working day.
  • Cash is still a common mode of payment for retail and low-value transactions. Nearly two-thirds (65%) of digital purchases were paid in cash on delivery (eMarketer).
  • Postal orders are available through the Indonesian post office.



Indonesia Market Profile Infographic


1 (Progressive) max rate for incomes over IDR500 million


This Market Profile is brought to you by DBS. Get in touch with us for further insights on doing treasury in Indonesia and take advantage of our innovative solutions to empower your business. Click here to find out more.



Sources: World Economic Forum, PwC, International Monetary Fund, CIA World Factbook, Trading Economics, Organisation for Economic Co-operation and Development, Bank for International Settlements, Financial Services Authority, Asian Development Bank, Trading Economics, US Department of Commerce, Bank Indonesia, Financial Services Authority (OJK).

The information herein is published by DBS Bank Ltd. (“DBS Bank”) and is for information only. The information is assembled based on information available and accurate as at Oct 2019.

The information is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

The information herein may be incomplete or condensed. Any terms, conditions and opinions contained herein may have been obtained from various sources and neither DBS Bank, its subsidiaries/affiliates nor any of their respective directors or employees (collectively the “DBS Group”) make any warranty, expressed or implied, as to its accuracy or completeness and thus assume no responsibility of it. The information herein may be subject to further revision, verification and updating and DBS Group undertakes no responsibility thereof.

DBS Bank Ltd. All rights reserved. All services are subject to applicable laws and regulations and service terms. Not all products and services are available in all geographic areas. Eligibility for particular products and services is subject to final determination by DBS Bank Ltd and/or its affiliates/subsidiaries.