Fintech Market Overview

This article does not constitute legal advice.

Fintech in Indonesia


Generally, there are no tax incentives specifically tailored towards fintech companies. Nonetheless, corporations in new and innovative industries may be entitled to certain tax facilities such as a reduced corporate income tax rate. The Capital Investment Coordinating Board Regulation No. 7 of 2020 provide details concerning the type of businesses categorized as Pioneer Industries and how to apply for the deduction. Such activities include data processing, hosting and their corresponding activities that bring value, introduce novel technologies and have strategic significance for the national economy.1

Fintech companies are subject to regulation by Bank Indonesia and the OJK, with a difference in terms of the licence they provide. Bank Indonesia has set out rules in its Payment System Regulation No. 22/23/PBI/2020 dated 30 December 2020 (BI Reg 22), Payment Service Provider Regulation No. 23/6/PBI/2021 dated 1 July 2021 (BI Reg 23/6) and Payment System Infrastructure Provider Regulation No. 23/7/PBI/2021 dated 1 July 2021 (BI Reg 23/7). These stipulate that entities involved in payment system activities can carry out trials under Bank Indonesia supervision. Innovative technology-based payment systems that cover products, activities, services and business models using innovative technology in their economic ecosystem and digital finances, but not yet regulated by current regulations may take part in this development trial. Bank Indonesia has limited the scope of regulation to include only the provision of source of fund information, payment initiation, acquiring services, source of fund administration, remittance services, clearing and final settlement within Fintech activities.1

Financial services-related fintech activities are regulated by the OJK. The OJK Regulation 13/POJK.02/2018 regulating digital financial innovation in the financial services sector, dated 16 August 2018 (OJK Reg 13), requires companies that carry out the following digital financial innovation activities to register or obtain a license:

  1. Transaction settlement: focuses on, among other things, investment settlement
  2. Capital raising: includes equity crowdfunding, virtual exchange, smart contracts and alternative due diligence
  3. Investment management: includes advanced algorithms, cloud computing, capability sharing, open-source information technology, automated advice and management, social trading and retail algorithmic trading
  4. Fundraising and fund disbursement: includes P2P lending, alternative adjudication and third-party application programming interface
  5. Insurance: includes sharing economy, autonomous vehicles, digital distribution, securitisation and hedge funds
  6. Market support: includes artificial intelligence or machine learning, machine readable news, big data, social sentiment, market information platforms, automated data collection and analysis
  7. Other digital finance supporting activities: includes social and eco-crowdfunding, sharia digital financing, e-waqf, e-zakat, automated digital advisory and credit scoring
  8. Other financial services activities: includes invoice trading, vouchers and products using blockchain-based applications 1

Bank Indonesia and the OJK have the power to control, register and issue licences with regards to the previously mentioned fintech activities. Each organisation has established their own regulations and requirements contingent on the particular registration or licence that's necessary. Generally speaking, the OJK demands comprehensive standards for regulated fintech operations (like being creative and forward-thinking, using info tech as a platform for furnishing financial services to customers, encouraging financial literacy and inclusion) and any providers who fulfill these criteria should get in touch with official monetary authorities.1

Third-party websites that compare products or provide information on financial services must adhere to OJK Reg 13. This includes adhering to the Data Protection Regulations, any other data protection requirements set out in the regulation, as well as competition rules established by Law No. 5 of 1999 regarding prohibition of monopolistic practices and unfair competition, amended last by Law No. 11 of 2020 regarding job creation. Implementation regulations are also applicable to these aggregators.1

Crowdfunding in Indonesia

Fintech in other countries

  1. https://thelawreviews.co.uk/title/the-financial-technology-law-review/indonesia
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