Pursuing Financial Inclusion
AmCham Indonesia’s Financial Services and Fintech Mission explored regulatory challenges over a range of issues
By Peter Sean Lie
Thursday, July 5, 2018
Data localization, the national payment gateway, reinsurance, regulatory concerns and the emergence of the financial technology (fintech) industry were all topics discussed by American companies and important stakeholders from the Indonesian government in a very successful Financial Services and Fintech Mission held as part of Initiative Indonesia 2018, a joint AmCham-US Chamber of Commerce program.
US firms representing the insurance, technology and financial services industries took part in the mission held on June 27-29 in Jakarta, which saw a series of engagements with the Ministry of Communication and Informatics, the Ministry of Finance, the Financial Services Authority (OJK), and the Indonesia Investment Coordinating Board (BKPM).
“There are serious challenges in Indonesia for payments companies due to the National Payment Gateway and also for insurance firms due to market entry barriers,” said A. Lin Neumann, AmCham Indonesia’s Managing Director. “We discussed all these issues and more.”
The delegation of companies also met with the US Ambassador to Indonesia, Joseph R Donovan, in a warm breakfast meeting. There were also special engagements with the Indonesia Chamber of Commerce and Industry (KADIN) and the Indonesian Employer’s Association (APINDO) as well as representatives of Indonesia’s private sector including start-ups and rising players in the emerging fintech sector.
“Five years ago, fintech barely existed in Indonesia and now it is a vibrant and growing part of the financial scene,” said Neumann. “It helps with financial inclusion and is also a growing lure for investment. We are excited to be part of that growth.”
Government stakeholder engagement
A number of ministries and agencies were visited by the delegation during the three-day mission. On the first day, the delegation met with Fauzi Ichsan, Chief Executive Director of the Indonesia Deposit Insurance Corporation, whose responsibility is to ensure depositor funds and maintain stability in the banking system. Reinsurance was the main focus of the discussion, along with data localization in the banking sector.
At the Ministry of Finance, Minister of Finance Sri Mulyani Indrawati was accompanied by the Director General of Taxation Robert Pakpahan and answered questions from the delegation. Tax treatment for e-commerce was the main issue discussed, concerning the government’s tax plans for the emerging sector. Sri Mulyani also applauded American companies for their contribution to the Indonesian economy.
The mission also hosted Rudiantara, the Minister of Communication and Informatics and Thomas Lembong, chairman of BKPM, in a lunch meeting at the Mandarin Oriental. They exchanged thoughts and concerns regarding issues such as data localization, updates to the negative investment list, technology and financial inclusion.
The delegation also met two representatives from the OJK in separate meetings: Triyono Gani, the Head of Digital Finance Innovation and Microfinance Development; and Imansyah, Senior Advisor on International Affairs. The meetings discussed the OJK’s strategic initiatives for 2018, the impact of the fintech industry on conventional banks, and issues in the insurance sector.
As well as dealing with government stakeholders, the mission also engaged with local business associations on fintech and financial services. A lunch meeting with representatives of KADIN and APINDO was held at the Mandarin Oriental Hotel.
In her opening remarks, Shinta Kamdani, KADIN Vice Chair, said that she appreciated the support of foreign companies in Indonesia. The discussion continued on topics such as the US-China trade war and its impact on Indonesia, the negative investment list, foreign direct investment incentives such as tax holidays, and the plan to set up a joint working group on fintech.
The fintech discussion continued in the Industry Leaders’ Forum, where the delegation met with various Indonesian fintech and e-commerce players including Traveloka, Go-Pay and Investree. The forum mainly discussed the conducive start-up regulatory environment in Indonesia, considering the majority of fintech players are start-ups.
A reception was later held in conjunction with AmCham’s Joint Chambers Networking Evening, which was co-hosted with the Indonesian Australia Business Council (IABC), the Italian Business Association in Indonesia (IABI) and the Indonesia Canada Chamber of Commerce (ICCC).
Initiative Indonesia 2018
The mission was the second of the 2018 US-Indonesia Investment Initiative (USIII), which has provided continuous engagement on investment issues between the US and Indonesia for five years. Initiative Indonesia offers US companies the opportunity to meet directly with the Indonesian government and other stakeholders to gain more clarity on economic regulations and policies.