fintech indonesia

The Impact of Illegal Fintech Practices and How to Run A Legal Fintech Business in Indonesia

  • InCorp Editorial Team
  • 9 May 2019
  • 4 minute reading time

Financial Services Authority (Otoritas Jasa Keuangan – OJK) via its task force (Satgas Waspada Investasi OJK) has identified 144 illegal fintech companies operating in Indonesia without legal entities, proper business licenses or registration certificates from OJK.

Based on the data from OJK, illegal fintech developers that were screened by the Task Force consisted of foreign names such as Liu Xiaotian, the Quetumedia company ltd with the name African Loans 2019 platform, Bnuuji Ostudio, Indiabulls Ventures Limited and Wang Xingfu.

Cause and Precautions

The large number of illegal fintech companies from outside Indonesia is mainly caused by the consumptive level of society. To prevent more illegal fintech companies from operating in the country, the government is urged to improve the community literacy along with the enhancement of infrastructure, coordination and law enforcement.

OJK, as the authorised institution in this matter, has disseminated important information to the public, which is to take note of the following matters before using any fintech services:

  • Ensure that the party offering the investment has the permission from the competent authority in accordance with the business activities carried out.
  • Ensure that the party offering investment products has the permission to offer investment products or is listed as market partner.
  • Ensure that if there is an inclusion of the logo of an agency or government institution in the media, the offer has been made in accordance with the provisions of the legislation.

The Impact of Illegal Fintech Practices in Indonesia

The existence of this illegal fintech practices may provide a negative stigma and can reduce the level of public trust in the fintech industry, which is currently growing rapidly now in Indonesia.

Business activities of illegal fintech indicate the violation of regulations, laws, and ethics. Even worse, the existence of illegal fintech practices may trigger criminal activities such as money laundering or terrorism funding and misuse of information.

How to Run A Fintech Business in Indonesia Legally

To run your fintech business smoothly in Indonesia, the best thing to do is, of course, to ensuring compliance with the laws and regulations. OJK released a new regulation in 2018 with regards to the formation of fintech companies in Indonesia.

Known as the Digital Financial Innovation Regulation, it stipulates that the following process must be undertaken:

  • Company registration with OJK. After this, you will have to go through a Regulatory Sandbox, which is used by OJK to test, observe and determine how fintech companies work.
  • The entire Regulatory Sandbox process takes approximately 12 months.
  • Then, you will need to apply for a fintech permit at OJK.


The best legal entity to run a fintech business in Indonesia is by establishing a local limited liability company (PT). When setting up a PT for your fintech business, you will be able to separate your company assets from your personal assets.

Important Points to Consider to Start a Fintech Business in Indonesia


Before setting up your fintech business, you should also consider the ownership. As a foreign entrepreneur, you are allowed to become the owner of your fintech company. However, there is a maximum ownership, which is 85%.

Investment Capital

According to the latest changes laid out in  Job Creation Law, the classification of Local PT in Indonesia based on paid-up capital as follows:

  • A micro-enterprise: less than IDR 1 billion
  • A small enterprise: IDR 1 – 5 billion
  • A medium enterprise: IDR 5-10 billion
  • A large enterprise: more than IDR 10 billion

Application for License and Permit

Once your company has been registered, you need to apply for a permit within 12 months. If your company fails to fulfill this requirement, you will risk losing your registration certificate. With that being said, you will have to go through the registration process again.

Another license that you need to acquire is called PSE license from Depkominfo (Department of Communication and Information and Technology) to prevent any illegal activities.

How Cekindo can Assist

Joining the fintech landscape in Indonesia requires expertise and thorough market research. Cekindo’s team of professional consultants is able to provide you with detailed insights regarding fintech company setup in Indonesia. Get in touch with us by filling in the form below or visit our offices in Jakarta, Bali and Semarang.

Pandu Biasramadhan

Senior Consulting Manager at InCorp Indonesia

An expert for more than 10 years, Pandu Biasramadhan, has an extensive background in providing top-quality and comprehensive business solutions for enterprises in Indonesia and managing regional partnership channels across Southeast Asia.

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