11 Feb 2021
Indonesian Central Bank Regulation Introduces New FDI Restrictions in Payments Sector


Shortly before the New Year, Indonesia’s central bank, Bank Indonesia (“BI”), issued Regulation No. 22/23/PBI 2020 on payment systems (the “Regulation”), which stipulates a reduction in the level of foreign participation permitted in payment system operators. The new provision will have an impact on businesses providing remittance, payment gateway, acquiring, and other payment-system services as these sectors were 100% open to foreign investment prior to the introduction of the Regulation.


The Regulation enters into force on 1 July 2021.


Reduced Foreign Participation


The Regulation requires a minimum 15% Indonesian shareholding, with 51% voting rights to be held by Indonesian investors in a non-bank Payment Services Provider / Penyedia Jasa Pembayaran (“PJP”), which is defined as including a business that provides payment gateway, acquiring, payment remittance or payment initiation services:



PJP Business



Shareholding (nominal/par value)[1]

Voting Rights








A new business that is categorized as a non-bank Payment Services Infrastructure Provider / Penyelenggara Infrastruktur Sistem Pembayaran (“PIP”), including a provider of clearing and settlement services, must now have a minimum of 80% Indonesian shareholding, with 80% voting rights to be held by Indonesian investors:


PIP Business



Shareholding (nominal)[2]









BI has not provided guidance as to how the 51% voting and 15% shareholding requirements applicable to PJP businesses should be achieved. From the company-law perspective, the combination requested could be achieved by the creation of a share-class structure under which the shares to be held by local shareholders (15%) confer voting rights that are equivalent to 51% of total voting rights in the company.




The BI regulation implicitly permits foreign shareholdings and voting rights in existing PJP and PIP businesses to be ‘grandfathered’ should they have been licensed and in existence prior to 1 July 2021. Thus, such businesses will be able to maintain foreign shareholdings and voting rights that exceed the new limits.


However, the Regulation explicitly requires businesses that experience shareholding changes post 1 July 2021 to comply with the new requirements. Consequently, they would be required to divest shares accordingly so as to comply with the restrictions.


Reassessment of Existing Businesses


The Regulation also sets out new standards aimed at improving data and system security, ensuring mitigation of operational and liquidity risks, and fulfilling minimum capital requirements. Existing licensed businesses are required to comply with the new standards for their respective operations (PJP or PIP) within 2 years of the regulation coming into force (1 July 2021).


BI may also require PJP and PJP to provide it with projections and forecasts so as to help ensure that  BI and the legal framework can keep “ahead of the curve” as regards market developments. This is intended to rectify the situation whereby BI has often been forced to play “catch-up” in the past as a result of rapid market change.


ABNR Commentary


First and foremost, from a practical business perspective we would advise companies that are currently pursuing M&A deals in the payments sector to ensure that closing takes place before the Regulation comes into force (1 July 2021) so that the deal may be grandfathered under the previous rules (up to 100% foreign ownership).


It is also interesting to note that BI has introduced the concept of control in the Regulation by requiring qualified Indonesian shareholders to have 51 percent of the voting rights in a PJP and 80 percent in a PIP. The control aspect does not stop at voting rights, but also extends to special rights to appoint a majority of the Board of Directors, as well as veto rights involving “significant impacting” shareholders’ approval to be with the qualified Indonesian shareholder.


This express focus on control in the Regulation is something of a new departure. Typically, foreign shareholding restrictions in Indonesia do not go to such detail, which has frequently left the door open to various interpretations and approaches for getting around the restrictions. In this regard, the concept of control, as deployed by BI in the Regulation, goes beyond simple -- it also prohibits non-Indonesian shareholders from holding special rights that could have a significant impact on the company, such as the right to appoint management or veto decisions at the Shareholders General Meeting.


On a more macro level, while BI may have strong economic reasons for introducing new restrictions on foreign participation in the payments industry, it does seem rather incongruous that they should be brought in so shortly after the enactment of the Job Creation Law (Law No. 11 of 2020),[3] a game-changing piece of legislation that is designed to implement the Government’s commitment to improving Indonesia’s business climate by significantly reducing FDI restrictions.


By partners Mr. Giffy Pardede ( and Ms. Elsie F. Hakim (, and associate Ms. Dwi Meitiara Bakrie (


[1] We assume that Bank Indonesia will calculate this on the basis of the aggregate nominal (par) value of shares recognized by the Investment Coordinating Board (BKPM).

[2] We assume Bank Indonesia will calculate this on the basis of the aggregate nominal (par) value of shares recognized by the Investment Coordinating Board (BKPM).

[3] Undang-Undang Nomor 11 Tahun 2020 Tentang Cipta Kerja


This ABNR News and its contents are intended solely to provide a general overview, for informational purposes, of selected recent developments in Indonesian law. They do not constitute legal advice and should not be relied upon as such. Accordingly, ABNR accepts no liability of any kind in respect of any statement, opinion, view, error, or omission that may be contained in this legal update. In all circumstances, you are strongly advised to consult a licensed Indonesian legal practitioner before taking any action that could adversely affect your rights and obligations under Indonesian law.