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Guide to Starting a Finance Company in Indonesia

Starting a Finance Company in IndonesiaIndonesia has a flourishing financial technology (fintech) landscape with a range of diverse and innovative services including digital payments, peer-to-peer lending, investment management, crowdfunding, and more. The tremendous growth of the fintech sector, both locally and internationally, is expected to go on for a long time.


New Fintech Regulations

Indonesia’s fintech companies are subject to regulations by the Bank of Indonesia and the Financial Services Authority (OJK), otherwise known as the Otoritas Jasa Keuangan.

The enactment of the OJK Regulation No. 35 /POJK.05/2018, or known simply as Reg. 35, on 2018 has helped ease restrictions on opening a finance company.

The main changes of Reg. 35 are:

  • Finance companies can now offer two types of cash lending: working capital cash loans and consumer cash loans.
  • Down payment requirements for vehicle loans are now set as percentages of the absolute purchase price of the vehicle.
  • Finance companies are now permitted to conduct operations such as marketing, credit-application, and repayment services on online platforms.


Requirements to Start a Finance Company

Investors may start a finance company in Indonesia by establishing a limited liability company or a cooperative. Here are the requirements for starting a finance company in Indonesia:

  • The percentage of foreign ownership is limited to 85%, hence companies require at least one local shareholder.
  • The minimum Indonesian company structure requires two shareholders: one Commissioner (must be an Indonesian citizen), and one Director. Both the Commissioner and Director must be able to show managerial experience in the financial sector.
  • The minimum paid-up capital is IDR 100 billion for limited liability companies and IDR 50 billion for cooperatives. Evidence of such capital can be provided by either signing a capital statement letter or by transferring the money to your company’s bank account.


Procedures for Starting Finance Company

  1. Incorporate the company (either as a limited liability company or a cooperative)

    This is done by submitting company registration forms and required paperwork to Indonesian government agencies such as the Indonesian Company Registry, Tax Office, the Ministry of Law and Human Rights, and Ministry of Manpower.

  2. Obtain an OJK license

    This is done by submitting the application form and required documents to OJK. The application will typically be approved or rejected within 30 days of the application receipt.
    Once the license is approved and obtained, the company must conduct business activities in two months and report the company’s business activities to the OJK within 10 days from the date of commencement of business.

  3. Register your IT system with the Ministry of Communication and Information Technology (Kemkominfo)

    This can be done at their official government website. Kemkominfo is responsible for all aspects of fintech that fall under information technology and will serve as a portal for communication.


Additional Information

Obtaining the proper permits are necessary to avoid legal penalties and business closures as the OJK keep a watchful eye on the fintech sector.

Starting a Finance Company in Indonesia