Population: 274 million

Wealth in domestic bank deposits: 488 billion USD (September 2023)

Offshore expatriated wealth: 3.9 billion USD

Main offshore banking locations: Singapore, Netherlands, Virgin Islands, Mauritius, Cayman Islands, Hong Kong

Number of individual brokerage accounts: 6.3 million (2023)

Crypto adoption (% of population): 12.6 million (4.55%)

TLDR

Indonesia has been gradually liberalizing its financial and investment regulations over the past few decades. However, some restrictions still remain in areas like foreign exchange and cross-border fund transfers. The cryptocurrency industry is growing quickly, although crypto cannot be used as legal tender. The regulatory environment is still evolving. Foreign companies can offer securities in Indonesia but need to follow the registration and reporting requirements.

Exchange Controls

The rupiah is subject to strict exchange controls and is not freely convertible or transferable outside Indonesia. Transfers above 100 million rupiah ($6,800) require supporting documents on the identities of sender and recipient, purpose, and reasons. Allowed purposes are trading goods/services, investments, loans, finance.

Individuals can physically carry up to 100 million rupiah out of the country without approval. Carrying over 100 million rupiah requires central bank approval and customs declaration. Violations can attract fines up to 300 million rupiah.

Exporters have 90 days to repatriate export earnings from offshore accounts to domestic banks. There are no restrictions on re-transferring funds abroad post-repatriation.

Foreign currency borrowing must go through onshore banks registered with Bank Indonesia. Banks have a $1 million limit on derivative transactions with foreign counterparts, unless for hedging purposes.

Foreign Securities

Foreign companies can offer securities in Indonesia by registering with the Financial Services Authority (OJK) and appointing a local underwriter/guarantor. This subjects them to Indonesian capital markets regulations.

The registration statement must include a prospectus with comprehensive details on the issuer and securities. Ongoing disclosures are required if listed on the exchange.

The minimum investment is 10 billion rupiah for foreign direct investment companies.

Qualified Investors

Indonesia generally does not make a distinction between qualified and non-qualified investors, with some rare exemptions. For example, the country’s first crypto exchange opened in 2023, serving only accredited investors.

Cryptocurrency Regulation

Indonesia legalized crypto trading by classifying cryptocurrencies as commodities in 2018. However, cryptocurrency cannot be used as legal tender or for payments in Indonesia. Concerns over volatility and criminal abuse led to the payments ban.

The Commodity Futures Trading Regulatory Agency (BAPPEBTI) oversees crypto regulation. Exchanges need to obtain a license from BAPPEBTI and implement AML/KYC requirements.

BAPPEBTI regulations cover areas like physical crypto trading, licensing of crypto asset exchanges, amendments to existing regulations.

Roughly 5% of Indonesians (13 million) are estimated to own cryptocurrency as of 2022. The regulatory environment remains fluid but may become more crypto-friendly given the growing user base.