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.
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:
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.
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:
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.
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%.
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:
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.
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.