Considering Indonesia’s huge population, the insurance industry in the country has been presenting significant opportunities. With the growing middle-income and wealthier population, the insurance buyers in Indonesia are also on the rise. These attractive target audiences in the insurance industry have given foreigners intentions to start an insurance company in Indonesia. Therefore, the growth rate of the insurance company in Indonesia remains high.
Previously, the foreign ownership of insurance companies in Indonesia was still restricted under the Negative Investment List with maximum foreign ownership of 80%.
In other words, foreigners needed to find one or more Indonesian partners to make up another 20% of local ownership in the form of a joint venture, to establish an insurance company in Indonesia.
Insurance companies included under this previous restriction are those offering conventional general insurance services, conventional life insurance services, Shariah-compliant life insurance services, conventional reinsurance services, Shariah-compliant reinsurance services, and Shariah-compliant general insurance services.
Now, good news for all foreign investors, the Indonesian government has increased foreign ownership for the insurance company in Indonesia to more than 80%. The lift of the restriction was done through the enactment of the Government Regulation No. 3/2020 on Foreign Ownership of Insurance Companies, effective since January 20, 2020.
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The new regulation now allows foreign capital participation of an insurance company in Indonesia to exceed 80%.
For foreigner owners of private insurance companies or insurance companies that are not publicly listed with foreign ownership exceeding 80% before the new regulation came into effect, they are exempted from the foreign ownership limitation. However, they are forbidden to increase their foreign ownership.
Furthermore, the regulation mentions that in the event when an insurance company does not get a local partner but wants to increase its capital, the company’s paid-up capital shall then be made through an initial public offering of shares in the country. The 20% requirement through the local capital market was also revoked to allow foreigners to increase capital per their capital shares.
In addition to the increased foreign ownership, it is now also a must for insurance companies in Indonesia to have in the Board of Directors at least one compliance director. This director should be responsible for managing matters related to compliance only. Further details can be discussed with Cekindo or seen under POJK 43/2019.
To start an insurance company in Indonesia, a foreign investor must first set up a foreign limited liability company (PT PMA). Then, the foreign investor is required to acquire a principle license from the Investment Coordinating Board (BKPM).
Once the principle is secured, the foreign investor shall continue to apply for a business license from the Financial Services Authority (OJK). OJK is the authority that oversees the insurance industry in Indonesia in regards to licensing, regulations, sanctions, and other policies and implementations in the financial sectors.
Incorporating your business in Indonesia gives you numerous benefits to grow your business. These benefits include lower corporate tax rates, limited liability for owners, and better access to grants and capitals.
Cekindo’s business incorporation services are reliable, fast with a high success rate, available to all industries and sectors including insurance in Indonesia.
Our experts will break down the incorporation process into a step-by-step guide to make it simple and convenient for you. So now, let us handle the tedious paperwork on your behalf so you can concentrate on what’s important – growing your business.
You can now start your business incorporation in Indonesia with Cekindo by contacting one of our representatives. Fill in the form below.