(Photo: universal payments wire)

JAKARTA (TheInsiderStories) – Bank Indonesia has put a 49 percent limit on foreign ownership in companies that offer electronic money services in a bid to better regulate such services amid growing interest in financial technology.

The limit was set by central bank to all electronic money issuer companies, both operating and newly handing permits, according to BI Director of Payment System Onny Widjanarko.

According to the rules, every company offering payment in electronic money services also must obtain a permit from Bank Indonesia.

The new foreign ownership limit applies only to new investment, or to any existing firm who is changing ownership.

Based on central bank regulations, e-money businesses should secure a license from BI for various payment system service providers such as: Principal, Issuer, Acquirer, Clearing Operator and Final Settlement Operator.

Out of the 26 companies licensed with the central bank as electronic money operators 11 are banks and the rest are non-bank institutions, according to a list that was last updated on September 14 on BI’s website.

Indonesia’s e-commerce industry is expected to grow rapidly in the years ahead and therefore Bank Indonesia set new rules to ensure that all firms maintain “the principles of prudence and adequate risk management” in accordance with national interests and consumer protection.

Google Inc. and Temasek Holdings Pte recently released joint research that shows Southeast Asia’s digital economy (which includes a variety of segments including e-commerce, online games, and online advertising) will rise to US$200 billion by 2025.

Indonesia’s digital market is forecast to account for 40.5 per cent – or $81 billion – of this total market in the region. With an estimated $46 billion, Indonesia’s e-commerce sector will contribute most to the total.

BI first introduced regulations for e-money in 2009 (PBI No. 11/ 12/ PBI/ 2009). They went through two rounds of revisions, in 2014 and 2016, to keep up with developments in the digital economy.

BI deputy governor Mirza Adityaswara told local press on October 3 that the growth of e-commerce businesses was faster than the development of regulations. The latest regulation, PBI No. 18/ 17/ PBI/ 2016, does not consider more sophisticated instruments such as crypto currencies.

 

Written by Elisa Valenta, Email: elisa.valenta@theinsiderstories.com

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