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 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.



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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 58th in the world for its financial system in The Global Competitiveness Report 2019.
  • The report also states that the country is ranked 80th for the soundness of its banks, although it came 17th for its banks’ regulatory capital ratios. It was rated in the top 40 for both venture capital availability and financing to SMEs.
  • The financial sector is developing, and the banking sector is crowded but offers significant opportunities due to high margins and low penetration levels. 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 521,230 billion at the end April of 2020.
  • 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 110 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 introduced measures to accelerate consolidation in the sector, with the aim of reducing the number of banks to 60-70 within the next decade. It can also force small or struggling banks to consolidate in extraordinary circumstances.
  • Indonesia has both government and corporate bonds. Outstanding local currency bonds totalled IRD3,324.7 trillion at the end of March 2020.
  • Indonesia has average daily trading volumes of USD7 billion of FX and OCT derivatives, according to the Bank for International Settlements Triennial Central Bank Survey.
  • 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. Commercial banks cannot conduct overseas transfers in IDR. Only authorised banks can carry out foreign exchange transactions. There are no restrictions for borrowing foreign currency from offshore banks, but local companies are subject to hedging and other requirements. Foreign currency transfers of more than USD10,000, must be reported to the 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 22% for the 2020-2021 fiscal year, reducing to 20% from fiscal year 2022 onwards. The standard CIT rate is reduced
    • by 3% 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. The export of goods and some services is zero-rated. From July 1, 2020, VAT of 10% applies to foreign intangible goods and services provided through the e-commerce system.
  • 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 is between 5% and 20% on dividends and 0% and 15% on interest where a tax treaty is in place and the non-resident can produce a Certificate of Residence. WHT is 20% for both interest and dividends 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.


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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 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 110 commercial banks, of which 52 are regional government banks and 14 are Islamic banks. In addition, there are 8 foreign-owned banks.
  • Islamic banking has an increasing presence in the banking sector, with 14 Islamic banks and 20 banking units within regular banks. It 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. Foreign currency transfers exceeding IDR 10 billion require supporting documents for the basis of the transfer
  • 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, 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) 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 75 banks, credit cards by 26 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.
  • In 2019, the e-commerce market was worth USD13.6 billion, 52% of which was mobile commerce.
  • Cards were used for 34% of e-commerce payments in 2019, while digital wallets were used for a fifth of online transactions.
  • 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.


Foreign Exchange


Indonesia has a number of controls in place governing foreign currency transactions. Despite these controls, foreign exchange trading volumes are on an upward trajectory.


FX Landscape

  • The official currency of Indonesia is the Indonesian rupiah (IDR). It is a restricted currency and cannot be freely traded outside of Indonesia.
  • Indonesia’s monetary policy is set and managed by its central bank, Bank Indonesia (BI), which also sets interest rates.
  • BI uses an inflation targeting framework to maintain the stability of the IDR, while adhering to a free-floating exchange rate system. Exchange rate stability is a key aspect of monetary policy and BI will use monetary controls to achieve this objective if necessary.
  • Indonesia has average daily trading volumes of USD7 billion of FX and OTC derivatives, according to the Bank for International Settlements Triennial Central Bank Survey. (Bank of International Settlements,, December 2019)
  • Only authorised banks may carry out FX transactions.
  • Commercial banks cannot conduct overseas transfers in IDR. The money must be converted into a foreign currency first.


FX Management

  • Resident companies can have accounts denominated in both local and foreign currencies onshore. They may also have foreign exchange accounts offshore, but they cannot hold IDR accounts offshore. Local IDR accounts can be converted into foreign exchange.
  • Non-resident companies may also hold accounts in both local and foreign currencies in Indonesia. IDR can be freely converted into other currencies. They cannot hold IDR accounts offshore.
  • All cash and non-cash transactions carried out within Indonesia must be conducted in IDR, with the exception of certain transactions, such as international trade and offshore loan transactions.
  • Companies are not required to convert their foreign currency receipts into IDR. Proceeds from the export of natural resources must be kept onshore and deposited in a special Proceeds Account with a foreign exchange bank.
  • Resident companies can take out IDR loans onshore and FX loans offshore, but the latter are subject to hedging, liquidity and credit requirements.
  • Non-resident companies cannot borrow IDR or FX onshore. Those taking out foreign FX loans of more than USD100,000 offshore for use onshore must meet reporting requirements set by BI. (Bank of Indonesia,
  • A range of products to help companies manage FX risk are available in Indonesia, including FX options, FX spot and FX forward, non-deliverable forward, and cross currency swap.


Exchange Controls

  • Indonesia has a number of controls governing foreign currency transactions.
  • If the transfer of foreign currency exceeds USD10,000, banks must report the transaction to BI. (
  • Companies that purchase foreign currency in excess of USD100,000 per month must supply information on the underlying transaction, which must relate to the domestic or overseas trading of goods and services, direct investment, portfolio investment or loan or capital investment, the extension of credit or financing by a bank in a foreign currency or in IDR for trading or investment purposes. (Bank of Indonesia,
  • Transactions between residents and non-residents must be reported to BI on a monthly basis. Resident companies must also report transactions for accounts held offshore.
  • There is no tax on foreign exchange transactions in Indonesia.
  • BI will intervene in the forward foreign exchange markets to stabilise the exchange rate of the IDR if required.
  • Non-resident companies may buy or sell FX derivatives against the IDR with a value of up to USD1 million per transaction. Derivative transactions for investment activity must have a minimum tenor of one week and a maximum tenor equal to the investment tenor. (Bank of Indonesia,
  • There are no restrictions on capital flows in and out of Indonesia, but banks must report such transfers to BI.
  • There are no restrictions on the remittance of profits or dividends. Withholding tax of 20% is charged on dividends and the repatriation of profits where no tax treaty is in place. Where a tax treaty is in place, rates range from 10% to 20%. (PwC,, 2020)
  • Domestic and cross-border intercompany lending is allowed subject to transfer pricing rules and minimum hedging, liquidity and credit requirements.
  • Foreign currency invoices are allowed for international transactions but domestic transactions must be conducted in IDR.



Indonesia is the manufacturing hub for Southeast Asia and its government is pursuing trade liberalisation policies. The country’s largest trading partners are China, the US, and Japan.


Trading Landscape

  • Indonesia has free or bilateral trade agreements with more than 18 countries. (Directorate General for National Export Development,, and Global Business Guide
  • Indonesia is a member of the ASEAN Trade in Goods Agreement, and through its membership of ASEAN it has free trade agreements with Australia, New Zealand, China, Korea and India, as well as its own agreements with Japan, Pakistan and the European Free Trade Association.
  • Indonesia is a member of the Asia Pacific Economic Cooperation (APEC), and the Pacific Economic Cooperation Council (PECC).
  • Indonesia has three free trade zones, which offer exemptions from import duties and/or VAT. There are also 15 special economic zones which cater to specific industries. (National Council for Special Economic Zone,
  • Indonesia has been a member of the World Trade Organisation since 1995, and a member of General Agreement Tariffs and Trade since 1950.


Import Regulations

  • Import documentation requirements include a bill of lading or airway bill, packing list, commercial invoice, certificate of origin and insurance letter.
  • Any goods imported into Indonesia must be declared to the Customs Authority using a Customs Declaration Form.
  • Importers must register with the Investment Coordinating Board (BKPM) and obtain a Business Registration Number (NIB) and an Importer Identification Number (API).
  • Importers must choose from one of two types of API: a General API (API-U), which is granted for the import of goods for trading or transfer to other parties, or a Producer API (API-P), which is granted for the import of goods for their own use as raw materials or materials that support the production process.
  • The issuance of an API-P for oil, gas, energy, minerals or other natural resources requires special approval from the relevant ministry.
  • Simplified customs procedures and other benefits are available to enterprises that qualify as Authorised Economic Operators from the Directorate General Customs and Excise.
  • Licences are required for the import of goods into Indonesia. The import of certain products, such as horticultural products, require the importer to have an Import Approval (PI).
  • Import duty is charged at rates ranging from 0% to 150% based on the customs value of the goods being imported. The customs value is based on the cost, insurance and freight level of the goods. (PwC, 2020)
  • As part of its policy to liberalise trade, the Indonesian government is progressively lowering import duty rates on most products.
  • A wide range of duty reliefs, exemptions and deferrals are available to both foreign and domestic companies as part of government efforts to promote local and export industries. The concessions are generally available to companies operating in free trade zones, bonded zones or bonded warehouses.
  • Value added tax (VAT) of 10% is charged on the import of goods. (PwC, 2020)
  • Import duty and import taxes must be paid before goods are released from the customs area.
  • A number of items are prohibited from being imported into Indonesia, including alcoholic drinks, animal skins, anti-Muslim material, computer software, drugs, fireworks and seeds.
  • There are no financing requirements for imports into Indonesia. Import financing is widely available, with options including letters of credit, import loans, inward bill collections, and accounts receivables.
  • There are no risk mitigation requirements for imports into Indonesia. The ministry of Trade publishes a list of approved insurers for import insurance.


Export Regulations

  • Export documentation requirements include a bill of lading or airway bill, packing list, commercial invoice, insurance certificate and certificate of origin.
  • An Export Declaration (PEB) must be submitted to the Customs and Excise Office at least seven days prior to export.
  • In order to export, companies must have a taxpayer identification number (NPWP) and an export licence in the form of a trade licence (SIUP) from the Ministry of Trade, a manufacturing licence from the Ministry of Industry, a PMA licence from the Investment Coordinating Bureau or an Export identification number (APE).
  • Specific export regulations apply to certain goods, such as forestry and processed wood products, certain stone, and products of marine and animal origin.
  • VAT is zero-rated on the export of goods and there are no export tariffs. (PwC, 2020)
  • A number of goods are prohibited from being exported from Indonesia, including goods with historical or cultural value, fry and arowana fish, sea sand, certain forestry products, tin ore and precious stones.
  • There are no export financing requirements in Indonesia. Export finance solutions are widely available, with options including letters of credit, export documentary collections, export receivables, forfaiting and export factoring.
  • The Indonesian government has set up two state-owned companies to provide export financial services, namely Lembaga Pembiayaan Ekspor Indonesia, also known as Indonesia Eximbank, for financing, and Asuransi Ekspor Indonesia for risk management.
  • There are no risk mitigation requirements for exports from Indonesia. Export credit insurance is widely available.
  • Proceeds from the export of natural resources must be kept onshore and deposited in a special Proceeds Account with a foreign exchange bank. The proceeds may only be used for certain specific purposes, such as paying export duties, repaying loans, acquiring imported goods, investment or dividend payments.



1 (Progressive) max rate for incomes over IDR500 million


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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.

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