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 One Belt One Road initiative, given its strategic location in Asia Pacific.

China is now the third largest investor in Indonesia after Singapore and Japan, 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


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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 37th in the world for financial market development in The Global Competitiveness Report 2017-2018, up from 49th place a year earlier.
  • The report also states that the country is ranked 68th for the soundness of its banks. Its macroeconomic environment is described as being relatively robust, although access to financing and inadequate infrastructure remain challenges.
  • 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.
  • Indonesia has a developing Islamic finance subsector, with 13 Islamic commercial banks that, along with the Shariah business units of conventional banks, had assets of IDR 356.5 trillion at the end of 2016, accounting for 5% of total commercial bank assets.
  • 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 116 commercial banks in Indonesia, with three large, state-controlled banks dominating the sector. Indonesia's Financial Services Authority (OJK) has set out plans to strengthen the sector through consolidation, reducing the number of banks to 60-70 within 10 to 15 years.
  • There are 10 foreign banks in Indonesia, and more than 20 foreign banks have representative offices in Jakarta.
  • 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. Companies must also submit reports on their foreign exchange activities and plans to obtain offshore loans to Bank Indonesia.


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%.
  • 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 withholding tax of 20%;
    • interest on bonds is subject to a final withholding tax of 15%
  • Proceeds from the sale of shares on Indonesian stock exchanges are subject to a final withholding 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 between 5% and 15% on interest where a tax treaty is in place and if the non-resident can produce a Certificate of Residence.
  • 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 and notional pooling is also available to resident companies.
  • Non-resident companies cannot borrow funds in Indonesia, so cannot participate in a cash concentration or cash pooling structure.


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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 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 116 commercial banks, of which 52 are regional government banks and 13 are Islamic banks. In addition, there are 10 foreign-owned banks.
  • Islamic banking has an increasing presence in the banking sector, with 13 Islamic banks and 22 banking units within regular banks. It accounted for 5.0% of the banking sector’s total assets in early 2018. 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. A non-resident is only permitted to receive a transfer in IDR for an economic transaction, and must have supporting paperwork. 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), 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.




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) may be settled via SKNBI Credit Clearing.
  • Low-value (less than IDR500 million) and bulk credit transfers are settled via SKNBI Credit Clearing on the same working day (5 batches a day).


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 62 banks, credit cards by 23 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 (Bersama, Prima 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. However, payments are not necessarily instantaneous and technical problems result in a high card abandonment rate by payees.
  • 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, Go-Pay and GrabPay 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

Recent developments


Indonesia World e-Commerce Leader

Indonesia has the highest mobile e-commerce penetration rate in the world. In the past month 76% of its internet users made a purchase using a mobile device, compared with a global average of 55% and ahead of even China at 74%, according to the Global Digital Report 2019. Online shopping, which is particularly popular in cities, has been boosted by the country’s high mobile penetration rate of 70% and its young population, with 60% of Indonesians aged under 40.

Read more about the development here


New e-Commerce Regulations Planned

The Ministry of Finance is introducing new rules under which e-commerce sellers must share data with the government to ensure they are paying the correct amount of tax. From April, all online marketplaces will have to report details of the turnover of all sellers to the authorities. E-commerce operators with a turnover of more than IDR4.8 billion must charge VAT to customers. Sellers classed as small or medium-sized businesses must also pay income tax of 0.5% of turnover, while large enterprises are subject to corporate tax of 25% of profit.

Read more about the development here.


Cryptocurrency Regulation Launched

The Futures Exchange Supervisory Board, part of Indonesia’s Ministry of Trade, has announced new regulations for the trading of cryptocurrencies. Under the rules, which treat cryptocurrencies as commodities, all cryptocurrency exchanges must be registered and approved before operating. They must also have robust security systems, keep records of transactions for a minimum of five years and have capital of at least IDR1 trillion. The regulation also sets out rules on good governance principles, legal certainty and consumer protection.

Read more about the development here


Indonesia Leads Southeast Asia e-Commerce sales

Indonesia recorded the highest level of e-commerce sales in Southeast Asia in 2018, with USD2.7 billion of purchases made online during the year, according to internet shopping aggregator iPrice. On December 12, national online shopping day, known as Harbolnas, a total of USD486.5 million was spent in a single day. Cashback offers from e-commerce firms have also driven the take up of e-wallets, which were used in 15% of transactions last year, up from 11% in 2017.

Read more about the development here.  



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: The World Economic Forum The Global Competitiveness Report 2017-2018; Bank for International Settlements; EY; Bank Indonesia; Financial Services Authority (Indonesia);; PwC; OECD


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 Apr 2019.

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Last updated on 14 Jun 2019