how to open a financing company in indonesia

How do You Open a Financing Company in Indonesia?

  • InCorp Editorial Team
  • 14 April 2020
  • 3 minute reading time

When entrepreneurs require financial assistance for their businesses, they will usually look to seek a loan from banks. However, in today’s Indonesia, many have also got their capital from private entities that are not banks such as a financing company in Indonesia, thanks to the rise of digital innovations. This phenomenon is particularly greater in the fintech sector.

While the traditional bank sector continues to expand robustly because of its strong networks, capital, databases, and human resources, it is still restricted by Indonesian laws that limit its innovation. This is why the fintech sector is growing tremendously and the trend is likely to go on for a long time.

The Fintech industry in Indonesia has been providing diverse and innovative services to the people: digital payment services, peer-to-peer lending, investment management, crowdfunding, and others.

Why Start a Financing Company in Indonesia

Due to the rapid growth of fintech in Indonesia, the Indonesian Financial Services Authority (OJK) enacted a new regulation OJK Regulation No. 35 /POJK.05/2018 or Reg. 35 on December 28, 2018.

The purpose of the regulation is to relax the restrictions of a financing company in Indonesia, specifically in vehicle loan down payment requirements and cash lending with an emphasis on fraud prevention.

The main key changes led by Reg. 35 has brought good news to investors who would like to start in Indonesia:

  • A financing company in Indonesia can now offer types of cash loans: working capital cash loans and consumer cash loans
  • The new down payment requirements for vehicle loans are now set as percentages of the absolute purchase price of the vehicle
  • Online platforms are now permitted for operations of this kind of company in Indonesia

Requirements for Opening a Financing Company in Indonesia

start a financing company in indonesia

Investors can establish a financing company in Indonesia in the form of a limited liability company or a cooperative.

However, the percentage of foreign ownership is limited in this sector and it varies according to its financing schemes. The maximum foreign ownership for a financing company in Indonesia is 85%.

On a side note, a financing company can now expand its financing activities to include sharia financing.

The required paid-up capital is IDR 100 billion for limited liability companies and IDR 50 billion for cooperatives.



Process for Opening a Financing Company in Indonesia

A financing company in Indonesia must acquire its license from OJK. Applicants must submit mandatory documents along with their application to the OJK.

Here’s the summarised process:

  1. Submit the required documents and application form.
  2. OJK reviews the application and approves or rejects the application within 30 days upon the receipt of the application.
  3. Once the company obtains the license, it must conduct business activities in two months.
  4. Report the company’s business activity implementation to OJK within 10 days after the commencement of the activities.
  5. Report these events to OJK: change of address; change of shareholders, directors, commissioners, or Board of Sharia Supervisory; change of Article of Association.
  6. Join the credit bureau and financing association designated by OJK.

How Cekindo can Assist

Indonesia is one of the major business centers in the world that has favorable conditions for the development of a financing company.

Cekindo has extensive experience and expertise and is aware of all Indonesian legal nuances and laws to help your business succeed in Indonesia.

We offer unmatched benefits and comprehensive support services to our clients and that’s why we have gained immense popularity and respect in the area of financing companies in Indonesia.

Speak to one of our expert consultants today. Fill in the form below.

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.

Get in touch with us.

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Disclaimer: The information is provided by PT. Cekindo Business International (“InCorp Indonesia/ we”) for general purpose only and we make no representations or warranties of any kind.

We do not act as an authorized government or non-government provider for official documents and services, which is issued by the Government of the Republic of Indonesia or its appointed officials.

We do not promote any official government document or services of the Government of the Republic of Indonesia, including but not limited to, business identifiers, health and welfare assistance programs and benefits, unclaimed tax rebate, electronic travel visa and authorization, passports in this website.

Frequent Asked Questions

As their names suggest, the main differences between the three business kinds in Indonesia lie in the businesses and the purpose of their incorporation. Local company owners (PT) must be Indonesian citizens, as even 1 percent of foreign ownership is not allowed. This type of company is not limited to entering any business field, and restrictions on incorporation are not so tight. On the contrary, a foreign-owned company (PT PMA) is open to international investors, but the maximal percentage of foreign shares differs in various business sectors. Contact InCorp to get the most updated information on the Negative Investment List. International investors tend to open representative offices as a first step to understanding the Indonesian market before setting up a limited liability company. This type is used for marketing and promotion activities and needs the right to sell directly and receive income.

There are three things business owners need to consider before setting up a business in Indonesia: the type of business entity, capital requirements, and regulations.

Indonesian regulations separate local companies from foreign companies. Generally, foreign-owned companies (PT PMA) have more limitations than their local counterparts (Local PT). However, to pursue more foreign direct investment in the country, the government has taken several bold initiatives to increase the ease of doing business and provide numerous attractive incentives for foreign investors.

Yes, this mainly applies to import and export businesses. Instead of establishing a company, you can use an under-name import service, an importer of record.

It should take between 30 to 45 days.