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.
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:
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.
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:
Indonesia is one of the major business centers in the world that has favourable 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.