ANNOUNCEMENT 13 Jul 2012

In July 2012, the government of Indonesia announced changed rules for foreign investors.

NUMBER OF INTERVENTIONS

1

  • 1 harmful
  • 0 neutral
  • 0 liberalising
Inception date: 13 Jul 2012 | Removal date: open ended
Still in force

FDI: Entry and ownership rule

On 13 July 2012, the Bank of Indonesia issued regulation 14/8/PBI/2012 regulating share ownership of commercial banks.
The new provisions introduce foreign ownership caps on banks of 40% (art. 2(2)a of the regulation), unless a number of conditions are met. These include getting a special approval from the Bank of Indonesia, the bank having to offer at least 20% of its ownership to the public within 5 years after the takeover amongst other conditions.
Furthermore, article 5(2) of the regulation requires foreigner or foreign companies to:

  • 'a. be committed to supporting the development of the Indonesian economy through the owned bank;
  • b. obtain a recommendation from the supervisory authority of the country of origin, in the case of a legal financial entity; and
  • c. to be rated at least as follows:
  • i. 1 (one) notch above the lowest investment grade, in the case of financial legal entities;
  • ii. two (2) notches above the lowest investment grade, in the case of a financial legal entity which is not a bank
  • iii. three (3) notches above the lowest investment grade, in the case of non-financial legal entities.' (own translation)

The regulation came into force on the day of its issuance.

AFFECTED SECTORS

 
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AFFECTED PRODUCTS

 
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