Market Profiles

FII Market Entry Requirements for Indonesia

RBC IS operates a segregated account structure in this market.

Please refer to 'Market Account Opening Requirements' for information on the market requirements. Clients are requested to refer to the requirements for information purposes only.

For further information or support around accessing this market, please contact your RBC IS representative.

Indonesia Stock Exchange (IDX)
The Jakarta Stock Exchange (JSX) and Surabaya Stock Exchange (SSX) officially merged on November 29, 2007 under the new name Indonesia Stock Exchange (Bursa Efek Indonesia BEI/DX). 

IDX is a privately-owned limited company, whose shareholders are local stock broking firms. IDX provides over-the-counter and on-the-counter facility for fixed income trading and enables market participants to report their transactions. It provides market information and easy reference for market participants to conduct both corporate and government bond negotiation and transaction.

IDX trading system is called the Jakarta Stock Exchange Automated Trading System (JATS), which facilitates order input, opening price formation, order matching and trade confirmation. Orders are matched first by price priority and then by time priority. Upon trade execution, JATS generates trade confirmations online.

IDX (Previously JSX) also has a pre-opening session, which is a 15 minutes session opened for participants to place buy and sell order into the JATS (Jakarta Automated Trading System) quarteran hour before the first trading session starts. The actual trading execution will only be done when the first trading session begins. IDX has included LQ45 shares in the pre-opening session. The decision to include LQ45 was based on the session’s significant improvement in terms of trade orders, transaction volume and value. Enhancements have also been made to the JATS by implementing JATS version VI to support market access for six bourses in ASEAN region i.e. Malaysia, Singapore, Vietnam, Thailand, Philippines and Indonesia. The IDX has advised that it will delay it's participation in the ASEAN Linkage project until further notice sighting infrastructure unreadiness as the reason.

In 2009, IDX launched a new trading system called Jakarta Automatic Trading System Next Generation (JATS Next-G) which has increased transaction processing capabilities from 900 transactions per second to 2,500 transactions per second. On May 14, 2012, IDX launched its latest version of trading system – JATS-NextG version 2.0. Based on the evaluation of the Pre-Live session, it is concluded that the JATS-NextG version 2.0 is ready to live with the scope of enhancement as follow:

1. Increasing trading system capacity by 5 times, from 1 million orders and 500 thousand transactions to 5 million orders and 2.5 million transactions.
2. Enhancing several functions of equity trading, including:
   • Password policy
   • Order management
   • Market information and
   • Changes in Data Feed specifications

Note: trading hours may be amended during the holy month of Ramadan.

Please also note that there are unconfirmed news circulating in the market advising that the Indonesian Government is planning to adjust the Indonesian time zone to match that of Singapore i.e. from GMT+7 to GMT+8 this year.

ISIN: Yes

Other: None

Ministry of Finance (MoF) - The MoF has the ultimate responsibility for regulating the capital market industry through OJK.

Bank Indonesia (BI) - Central Bank - BI is an independent body reporting directly to the House of Representatives. It provides currency control and supervises the banking sector in Indonesia. Settlement of government debt instruments and Certificate Bank Indonesia is conducted by BI through its Scripless Settlement Securities System (BI - SSSS). 

Bank Indonesia was founded on 1 July 1953 under Bank Indonesia’s Principal Act or the Act No. 11 Year 1953. Bank Indonesia became an independent central bank on 17 May 2000 when the Central Bank Act, No. 23 Year 1999 was enacted. The Bank is now an independent state institution. Bank Indonesia is the central depository and clearing house for government issues. The payment system is also managed by Bank Indonesia. BI issues and settles Bank Indonesia Certificates (SBI), which are similar to T-bills. These are immobilised at the central bank. SBIs are monetary instruments, conducted as part of central bank open market operation (OMO), used as a means of controlling base money. The issuance of the certificates is based on standards approved by the Board of Governors. Apart from responsibility for the payment system, Bank Indonesia is also responsible for:

• formulating and implementing monetary policy,

• maintaining stability of the currency (IDR),

• achieving and maintaining stability of the value of the IDR (Rupiah).

BAPEPAM - LK - (Indonesian Capital Market and Financial Institution Supervisory Agency)BAPEPAM - LK, previously acted as a supervisory agency for all capital market participants.Effective 1 January 2013, Bapepam-LK has merged to become OJK therefore Non-Bank Financial Institution and Capital market are supervised by OJK. Please refer to OJK below.

Indonesia Stock Exchange (IDX) - monitors trading, settlement, and listed companies' compliance with its regulations. It also receives corporate action notifications from companies and announces them to the market. 

PT KPEI - A limited liability company, which has obtained a business licence from BAPEPAM-LK as a clearing and guarantee institution to provide services in clearing and stock exchange transactions settlement guarantee. KPEI is owned by IDX (100%).

PT KSEI - A private limited liability company, which has obtained a licence from BAPEPAM-LK to conduct central depository activities.

Otoritas Jasa Keuangan (OJK) - Financial Service Authority
OJK’s role encompasses the previous regulatory role of BAPEPAM-LK and the supervisory function of Bank Indonesia.
OJK is the capital market regulator for all capital market participants including stock exchanges, KSEI, KPEI, brokers and custodian banks, insurance companies, pension funds and other financial institutions. From December 31, 2013, OJK became the organization responsible for regulating and supervising the financial service activities in the banking sector. All functions, duties and powers that the BI had in this area have been transferred to OJK.
OJK has the ultimate responsibilities for regulating the exchanges. All stock regulations are issued by OJK. It has the power to suspend trading in stocks and to delist companies to protect the interest of investors. All corporate bond issue must be reviewed and registered with OJK while non-public issue, such as CDs are reviewed by BI.

Shares on the IDX are held in physical or dematerialised form, but are traded only in scripless form.Scripless form shares are held through book-entry in C-BEST system.

Most debt instruments are held in scripless, apart from certain corporate bonds, which are issued in registered form.

Stock trading at the Regular and Cash Market has to be in a round lot of 100 (one hundred) unit or a multiple of multiply, while the stock trading at the Negotiated Market does not have to be in a round lot.

* The maximum price step is 20 times of the step value, should be below the limit of Auto Rejection, and is not valid on the pre-opening. Stock step value and its maximum price step are valid for one entire trading day and will be adjusted on the next day if its closing price falls on a different price range. The maximum price step should not exceed the percentage of Auto Rejection limit.

Auto Rejection
The price of bids and asks input into the JATS should be in a certain price range. If a Broker inputs a price beyond the stock's price range, the JATS will automatically reject the stock order.

Auto Rejection Percentage:

Reference Prices used to limit the highest and lowest offering price toward stocks entered into JATS at the Regular and Cash Markets are determined by the:

• Opening Price formed in the Pre-Opening Session; or
• Closing Price of the previous closing date if a Pre-Opening Price is not formed (Previous Price).
• In a case that a Listed Company doing corporate actions, in 3 (three) consecutive Exchange Days after the end of equity trading that has right (cum periode) in Regular Market, the Reference Price used is the Previous Price of each market (Regular or Cash).

Auto rejection limit of a newly listed stock in the Exchange (on its first day) is twice of the parameter above.

IDR

There is no formal OTC market, however all securities can be traded off-exchange and settled directly between trading counterparties.

Settlement at C-BEST - settlement at the Central Depository's Book Entry Settlement (C-BEST) is conducted real-time throughout the specified operating time, provided the instructions are matched with the counterparty, and both parties have sufficient stocks and cash to settle the trades. At present, C-BEST does not have the capability to 'link' trades, which has an impact on turnaround transactions. The settlement timeframe is as follows: 

T. The investor instructs their broker to execute the order and the broker executes trades on the Indonesia Stock Exchange (IDX). Trade confirmations are sent to investors. 

T+1 to T+2. The investor sends settlement instructions to the custodian for pre-matching. Upon receipt of instructions the pre-matching process will take place between the buyers custodian/broker and the seller’s custodian/ broker. 

T+2. For receipt versus payment transactions, the buyer must fund their account with custodian banks on T+2 to ensure availability of funds to be transferred to the Central Bank / payment bank with value T+3 morning. In Indonesia, overdraft facilities are not available to non-residents, therefore failure to fund on time will almost certainly lead to failed settlement and potential penalties. 

T+3. Exchange of shares and cash will be executed by all the parties involved in the transaction through KSEI C-BEST system. Once these transactions are matched, the investor‘s C-BEST account will be updated with the shares. For the selling party, KSEI will credit the proceeds with the payment bank or in Central Bank, where entries will be made to credit the investor‘s cash account held with the custodian bank on the same day. Confirmation of settlement will be sent to investors when the trades are confirmed as settled by KSEI and subsequently settled in the custodian operating system. 

Failed and unmatched instructions in C-BEST system will remain pending for five days before being dropped by the system. C-BEST will continue to search for a matching order to settle failed and unmatched instruction during these five days. For OTC transactions there will be no penalties levied by KSEI (apart from transaction fees) for trades that fail; however, the possibility of consequential claims from counterparties will remain. 

Effective as of 18 June 2015, KSEI has used Central Bank’s payment system for IDR cash settlements in Custodian Bank. Non-IDR cash settlements in Custodian Bank will still be using the payment bank. Moreover, on 17 Jul 2015, KSEI has appointed new payment banks for the period of 2015 - 2019 namely Bank Mandiri, Bank CIMB Niaga, Bank Permata, Bank Indonesia and Bank Central Asia. There will be a 're-alignment' process between the payment banks throughout the day. The process is intended to 'square off' cash positions between payment banks. The process is scheduled at 09:00, 11:00, 13:30 and 15:15 daily. This process will not be transparent to KSEI's participants through their C-BEST terminal. KSEI also has further plans to align their payment process to the Central Bank's payment system for securities company in the future.

CBEST is utilised for settlements of equities and corporate bonds.

Settlement at BI-SSSS - settlement at the Bank Indonesia-Scripless Securities Settlement System (BI-SSSS) is conducted on a real-time basis. There is no fixed settlement period for the fixed income trades. Settlement is negotiated between the buyer and the seller, but generally on T+2 or T+3. The settlement timeframe is as follows: 

T- Trade is executed.

SD-1 - Sub-registry receives instruction from client (i.e. in SWIFT format) and then pre-matches the trade with counterparty. For a real-time vs. payment (RVP) trade, cleared funds should be made available in the client's account on SD-1 by 12:00.

SD - Sub-registry will input trade instruction in BI-SSSS for matching and settlement process. BI-SSSS will check securities holding and cash for matching instruction. Once matched, securities transfer will happen and cash payment will be made immediately through real-time gross settlement (RTGS) at BI-SSSS system. Fail and unmatched instructions in BI-SSSS will be dropped after four hours or on the cut-off time. While the government debt instrument (GDS) and Sertifikat Bank Indonesia (SBIs) are settled in SSSS, the payments are undertaken using the BI's RTGS system with payment from the buyer's to the seller's sub-registry demand deposit accounts with BI. The SSSS and the RTGS systems are electronically linked.

S4 is utilised to settle Government bonds.

Cash settlement - Payments for securities are made through the appointed Payment Banks or directly via the Central Bank's real time payment system (RTGS).

Settlement of equities in the scripless market - For scripless settlement, netting applies for both equities and cash. In the netting system, KPEI is the central counterparty for all clearing members and is responsible for guaranteeing the obligations of the clearing member. Net settlement is conducted on T+3 for both selling and buying brokers, with KPEI instructing KSEI to debit net stock positions from the selling brokers, and then instructing the appropriate payment bank to debit the net cash position from the net buying broker's cash account. KPEI will then transfer the stock position to the buying broker that has paid their cash obligation. 

The netting settlement is conducted twice a day; in the morning between 07:00 and 09:30 (morning run) and in the afternoon between 12:30 and 13:30 (afternoon run). Brokers have to ensure positions are ready before the start of the run to be able to participate in the net settlement session. In the morning run, KPEI instructs KSEI to credit or debit the broker's receiving or delivery stock accounts depending on their net obligation for that day. Any outstanding positions, due to the unavailability of stocks or funds in the morning, are re-processed in the afternoon. Brokers who fail to meet their obligations will be penalised. 

The clearing and settlement procedures between brokers and KPEI are outlined as follows: 

T. Brokers execute trades on the IDX. Trade confirmations are sent to investors. 

T – 17:00. Securities and cash positions are netted by KPEI. 

T+3 – 06:00 to 09:30. KPEI performs the morning run by instructing KSEI to debit net stock positions from the net-selling brokers. After instructing the payment bank to debit the net cash position from the net buying broker's cash account, KPEI will transfer the stock position to the buying broker that has paid their cash obligation. Transfers will be conducted prioritising the largest net transactions, and will depend on the availability of stock at that time. 

T+3 – 12:30 to 13:30. KPEI performs the final net settlement process to complete settlement for that day. Brokers who have failed their obligations will be reported to KPEI who will initiate alternate cash settlement or utilisation of guarantee funds plus broker suspension. 

Local custodians do not participate in the net settlement system. Settlement outside the net settlement system is conducted on a gross basis/trade-by-trade basis. 

Physical - Unlisted Stock only
Physical securities are no longer tradable on the exchange. The settlement of securities and cash will be conducted directly between the buying and selling broker (outside PT Kliring Penjaminan Efek Indonesia - KPEI, or the Clearing and Guarantee Corporation). 

All listed stocks in Indonesia Stock Exchange (IDX) can only be traded in scripless form. 

New Requirement for FOP Transactions

• Must include transaction type (i.e. On / Off market) - field 94B
• Transaction reference to be stated in Field 20C - for on market transactions
• Specific “reason” for FOP to be stated in field 22F - for off market transactions
• Supporting documents to be provided to validate “reason”
• Implementation date July 21, 2014

The above requirements are for equities and corporate bond transactions only. These rules are governed by Central Depository.

The Indonesia Stock Exchange (IDX) has introduced short selling and margin trading regulations, which took effect from May 1, 2009. According to the new regulations, only shares that meet the following criteria can be traded under the margin trading and short selling method:

The price-to-earning ratio (PER) of the securities must not exceed 3 times their market PER.

• The securities of the listed company must have at least 600 shareholders.
• Shares that have been listed for at least 6 months must have a minimum daily transaction value of IDR 1 billion in the regular market and must have been traded with a minimum daily average value of IDR 10 billion for the last 6 months.
• Shares that are listed for less than 6 months must have a minimum daily transaction value of IDR 5 billion and the shares must have been traded with a minimum daily average value of IDR 50 billion for at least 3 months after listing.
• Shares that have been traded on a daily basis with exception if the IDX suspends the securities for 10 exchange days for the respective particular review period, i.e., three or six months.
• The number of shares owned by non-majority shareholders must be at least 20 per cent of the company's securities listed on the exchange for the respective particular review period,i.e., three or six months.

The IDX issues a monthly announcement listing the shares that are eligible for short selling (and margin trading).

A short sale is a transaction that provides an opportunity for investors to execute sales order transactions although they do not hold the said shares. Short selling is allowed for certain securities identified by the IDX. Brokers that provide margin trading and short-selling should have a minimum of IDR 25 billion of Net Adjusted Working Capital and obtain a license from the OJK and an approval from the stock exchange. Investors are required to open segregated accounts for margin trading and short-selling with a minimum initial guarantee fund of IDR 200 million for each account or 50% of the transaction value at the time of transaction whichever is higher.

Under the regular procedures, same-day turnarounds are possible provided that the investors have ensured the availability of the shares and funds on settlement date.

KPEI - (Kliring dan Penjaminan Efek Indonesia) A limited liability company, which has obtained a business licence from BAPEPAM-LK as a clearing and guarantee institution to provide services in clearing and stock exchange transactions settlement guarantee. KPEI is owned by IDX (100%).

KSEI - The Central Depository (KSEI - PT Kustodian Sentral Efek Indonesia) was formed in December 1997 and obtained a preliminary operating licence at the same time. A permanent licence was granted in November 1998. It is the only central depository for equity and corporate bonds in the Indonesian market and was set up as a private limited liability company. Otoritas Jasa Keuangan (OJK) is the regulatory authority for the depository. 

The first batch of scripless trading started in July 2000. All stocks traded in the regular market at the exchanges are now in scripless form. In addition to safekeeping, KSEI also handles settlement and corporate actions. 

Since May 2006, KSEI became Sub Registry of Bank Indonesia,KSEI is able to provide safekeeping and settlement services for Government Bond. In addition, in August of the same year, KSEI also started providing administrative functions for Indonesian Retail Bonds (ORI).

On cash settlement, KSEI has appointed cash clearing banks to effect the payment side of the netting process. These are Bank Mandiri, Bank CIMB Niaga, Bank Permata, Bank Central Asia and Bank Rakyat Indonesia. Effective as of 18 June 2015, KSEI has already implemented Central Bank payment system to support the cash settlement for custodian bank.

At present, acceptance of new membership into the Central Depository (KSEI) is available to custodian banks and brokers. Prospective new members are subject to a review and approval. KSEIs current shareholders are:

Custodian banks 36.00%
Brokers 31.50%
Indonesia Stock Exchange 19.00%
Clearing House (PT KPEI) 10.50%
Registrars 3.00% 

Bank Indonesia - The central depository for scripless Sertifikat Bank Indonesia and government debt securities (which include Government Recapitalisation bonds and Treasury Bonds), is Bank Indonesia.

BIS is an international organisation which fosters cooperation among central banks and other agencies in pursuit of monetary and financial stability. The Committee on Payments and Market Infrastructures (CPMI) uses three common structural approaches, or models, to categorise the links between delivery and payment in a securities settlement system.

The depository in Indonesia follows models 1 and 3. 

Model 1: a system in which there is a simultaneous transfer of securities and associated funds from the buyer to the seller. All transfers occur on a trade-by-trade (gross) basis with all transfers made via book entry. All transfers are final. This is the model followed for off-exchange transactions at KSEI, and BI-SSSS.

Model 3: a system in which securities transfers occur on a net basis, with final transfer of both securities and funds occurring at the end of settlement process. Used for on-exchange transactions.

Book-Entry: in the scripless environment, registration is no longer applicable. Securities are held in accounts at PT KSEI that mirror the account structure at the local custodian and the ownership is recognised to be that of the account holder. Ownership is transferred automatically upon settlement.

Physical: There are very few securities which remain in physical form, which include some delisted shares and promissory notes. Registration is available only to certain stocks whereas promissory notes are in bearer form. Registration where possible is recommended to ensure recognition of entitlement. The following documents are required to complete registration, typically a three-week process:

• power of attorney (notarised)
• share certificates endorsed by brokers
• copy of the original transaction note
• transfer deed completed by the original registered owner, selling broker, buyer and buyer's broker

Securities are typically registered in the name of the client, care of the subcustodian. There are no trust laws in Indonesia, therefore nominee arrangements are not recognised.

In the current scripless environment, the role of Registrar is limited to among others, conversion of scripless to scrip shares as registration process is no longer required for scripless shares.

The registration process will take seven to 10 working days.

Shareholdings in this market may be required to be disclosed by the beneficial owner, particularly when such shareholdings reach or exceed prescribed disclosure limits. Investors must ensure that they comply in full by reporting such holdings to the appropriate organisations, within the specified timeframe. If you have any questions regarding this issue we encourage you to consult your legal counsel.

Effective from March 14, 2017, any party who owns at least 5% of paid-up capital of public listed company needs report to OJK:

• Any party who owns directly or indirectly equal to or more than 5% of paid-up capital of public listed company shares and any subsequent change of ownership for a minimum of 0.5% conducted in one or multiple transactions after the 5% threshold is reached is required to report to OJK. A report must be submitted within 5 days of the changes in the ownership.
• Directors and commissioners of a public listed company are required to report their direct or indirect ownership or any changes of the ownership within three days after the changes. The information must also be disclosed in the company’s annual report or their website.
• The eligible reporting parties may provide written authorisation or Power of Attorney (PoA) to another party to perform the reporting to OJK and the report shall be submitted within five days after the acquisition of ownership or any subsequent changes.
• If the reporting is performed by another party based of the PoA, the report must be supplemented with a copy of the PoA.
• The report to OJK must be prepared in accordance with the reporting format as stated in the regulation.

Failure to comply with the reporting requirements in this market may lead to penalties and / or other sanctions.

Ownership of a registered holding which reaches or exceeds 5% of the listed capital of a company, must be reported to OJK within 5 days of the transaction. The report should disclose name, address and nationality of the investor, number of shares purchased, purchase price, date transaction and purpose of the transaction. 

KSEI calculates 5% stock ownership based on Single Investor ID (SID).

If 25% or more of the share capital is intended to be purchased, then the purchaser may be required to tender for the remaining equity or receive a waiver from OJK. For a banking sector stock, prior approval from Bank Indonesia is required before obtaining 25% interests or more.

There is no buy-in procedure for physical equities as they can only be traded off the exchange, whereby the settlement of securities and cash is conducted directly between the buying and selling broker.

Under the scripless market environment, KPEI imposes a penalty system called "Alternate Cash Settlement (ACS)" whereby the selling party who fails to deliver stocks on SD is obliged to compensate the buying party with cash on the same day. The ACS amount is 125% of the highest market value of the shares from T+0 to T+3. Failing to meet the above obligation will result in immediate trading suspension by the IDX. KPEI will in turn use the guarantee funds to cover the 'short' cash position and substitute the relevant buying broker. 

Brokers, who are aware that they will have insufficient stock holdings to meet their obligations on T+3, have the option to try buying the stocks from the cash market in the morning of settlement date (with settlement on T+0). KPEI will net off the broker's position as of SD from the two markets (regular and cash). 

Buying brokers with insufficient cash to meet their obligations on T+3 will be suspended. KPEI will use the guarantee funds (or use credit facilities from bank, as appropriate) to cover the obligations. Before suspending the broker, KPEI will check whether the broker has other collateral including offline collateral, such as time deposits, bank guarantees etc, which are pledges to KPEI. In the event that a broker is continuously unable to settle its obligations, all their assets including offline and online (cash and securities) collaterals will be sold out, and the proceeds will be used to replenish the guarantee funds. 

Charges: For dematerialised shares, the PT KPEI levies a penalty of 25% of the highest market valuation between T and T+3 on the failing broker. Failure to pay this fine results in suspension. KPEI will in turn use the guarantee funds to cover the "short" cash position and substitute the relevant buying broker.

Indonesia's stock lending and borrowing (SLB) programme was formally announced by the Chairman of BAPEPAM on August 13, 2001 and was soft launched on July 30, 2001.
The following is a summary of how SLB is conducted in Indonesia:

• The types of Shares that can be traded under SLB are regulated. A monthly list is issued by the IDX to announce these
• Parties wishing to execute SLB must enter into an SLB agreement with KPEI (Clearing Institution)
• Custodian Bank can act on behalf of Lenders only
• Max tenor is 90 days
• Minimum tenor is one day.

Please be advised that although SLB has been formalised in the market, in practice the active participants for SLB are mainly brokers. Please note that RBC Investor Services' subcustodian does not currently offer SLB facilities. 

Please note that there is a tax implication on SLB transaction negatively affecting local borrowers borrowing from overseas investors who are enjoying tax treaties. Reason being is that upon receipt of income on the borrowed assets (e.g. dividends), local borrowers would be subject to tax where as they are expected to pass on 100% of the income to the lender (who are taxed at a lower rate).

Currently, there are 134 stocks available under the SLB programme.

PT KPEI provides the Guarantee Fund for scripless equity trades. The Clearing Fund and Guarantee Fund are used to compensate the selling broker in cases where obligations cannot be met by the buying broker.

BAPEPAM issued two rules in 2003 in relation to the KYC (Know Your Client Principles) (the latest update OJK Regulations POJK No. 8 Year 2023  issued in 14 June 2023) and ‘Sub Account in Central Depository’, although Bank Indonesia had also previously circulated anti-money laundering regulations via their circular 3/10/PBI/2001 dated June 18, 2001 entitled “Know Your Customer Principles’. This regulation came into force on December 18, 2001. In 2010, the Government issued Law No 8 of 2010 amendment to Law No 25 of 2003 on Stipulation of Government Regulation in Lieu of Law No 12 in 2002 on Combating Criminal Acts of Terrorism as Legislation.

Anti - Money Laundering Measures

Indonesia is not a member of the Financial Action Task Force on Money Laundering (FATF). However, it is a member of the Asia Pacific Group (APG) on Money Laundering. Indonesia has signed and ratified the UN Convention Against Illicit Traffic in Narcotics Drugs and Psychotropic Substances of 1988. In the FATF public statement released on 26 June 2015, Indonesia is identified as a jurisdiction that has made significant progress in addressing the strategic AML/CFT deficiencies earlier identified by the FATF. Indonesia is no longer subjected to the FATF’s monitoring process under its on-going global AML/CFT compliance process. Other relevant laws and regulations are contained in: • Law of The Republic of Indonesia No 8 Year 2010 regarding Countermeasure and Eradication of Money Laundering.

For certain clients this is an FII market. Please refer to the Terms & Conditions for Global Custody or contact your RBC Investor Services' Client Manager before making portfolio investments.

Please note that the KSEI imposes a monthly fee of IDR 1,000,000 (on a pro-rated basis) on dormant KSEI accounts. A dormant account is defined as a securities account held in KSEI that does not have securities holding and that has had no transactions for a consecutive period of six months, calculated from the last securities closing balance recorded. If a security account has had no transactions in six months, but has holdings, it will not be classified as dormant. 

In order to manage dormant accounts held at KSEI, custodians are notified of all accounts approaching dormant status. Account holders can then decide on the action to be taken. Once an account has been identified as dormant, the account holder has the following options:

• to close the dormant account as soon as the said account is declared by KSEI to be in dormant status; or
• to pay the dormant account administration charges as per KSEI’s dormant account fee of IDR 1,000,000 per month, which will be proportionally calculated with the following formula: (X days/total days in a month) X IDR 1,000,000

The Central Depository has issued new requirements, effective 2011, that each investor investing in the Indonesian Capital Market must have a Single Investor Identification (SID). The SID is created by the Central Depository upon opening of the securities account with them. An investor can use the same SID for multiple accounts as long as the account still belongs to the same end investor.

The following information is required for account opening / SID creation at the depository: Indonesia SID Detail Template Combined

Foreign investors are eligible to acquire 100% ownership in companies in all industries, except in banking stocks and media companies. Effective July 2012, Bank Indonesia limits single ownership in Banks by financial institutions to 40 percent, non-financial institutions to 30 percent and families or individuals to 20 percent. The limit in ownership are applied to both commercial and syariah bank.

However, there is an exception in the new rule stating that financial institutions can own more than 40 percent of a domestic commercial bank under specific criteria and approval from BI. Foreign investors who wish to acquire more than 25 per cent of a bank’s share must obtain prior consent from Bank Indonesia.

Investors must obtain Bank Indonesia (Central Bank)’s approval and pas fit and proper test prior to executing any purchase of local bank shares that would affect the control of the local bank or exceed 25% of the local bank’s total issued shares. 

Central Bank policy also only allowed 1 party becoming a controlling shareholder in just 1 onshore Bank with exception:

• Controlling shareholder in 2 banks which carry out business under different principle respectively, namely conventional and based on Sharia principle
• Controlling shareholder in 2 banks, one of which is a Joint Venture Bank. Controlling Shareholder is a legal entity and/or an individual and/or business group which
  • Hold 25% or more of shares issued by the bank and owns voting rights
  • Hold less than 25% of shares issued by the bank and owns voting rights but has evidently exercised control on the bank either directly or indirectly

Article 17 of The Indonesian Law No.32 Year 2002 on Broadcasting stipulates that broadcasting companies are allowed to receive capital injection from overseas sources so long as this does not exceed 20% of the total capital and must be owned by at least two shareholders. Although the Broadcasting Law is being amended, it stipulates that foreign investors are allowed to buy up to 20% of paid-up capital in a broadcasting company. 

In March 2003, BAPEPAM together with the State Ministry of Communication and Information have reached an agreement to allow broadcasting companies to sell their shares to foreign investors up to 20% of the company's capital, through the issuance of new shares for the purpose of capital injection and business development. The regulators currently in the process of developing a detailed regulation for trading of broadcasting stocks, and several issues needs to be further discussed among the regulators which include the treatment of broadcasting shares currently owned by foreigners.

Not all business fields are ‘open’ to foreign investment. Under Presidential Regulation No.39 of 2014 the ‘Investment Negative List’ (the Negative List), which was last revised on 23 April 2014, business sectors are either completely ‘closed to’ investment or ‘conditionally open’ (meaning that they are subject to foreign ownership limits or require special arrangements and permits). The Negative List prohibits any investment activities from being conducted in those fields, whether by the PMA Company itself or by subsidiaries of the company.

The below business sectors permit the corresponding foreign ownership limits:

• Cyclamate and saccharine: available with a special license
• Construction in public services: 67%
• Film services: 49%Health services: 67% and can be conducted across Indonesia
• Health services: 67% and can be conducted across Indonesia
• Power plant sector: 49% with a maximum plant capacity of up to 10 MW. Power plants exceeding this limit will allow for foreign investments up to 95%. Foreign investment limit for power plant projects carried out in a public-private partnership is 100%. Under the partnership terms, a foreign investor can wholly own the power plant during the concession period, after which some equity must transfer to the Government.
• Agricultural: a maximum of 49% for plantations with no more than 25 hectares
• Communications and information:
  1. Postal services are subject to a special license and foreign investment is restricted to a maximum of 49%.
  2. Construction for telecommunication towers is open 100% to local investors only.

Indirect investment or portfolio investment where the transaction is carried out through the Indonesian Capital Market are not affected by the above list, providing the investor does not become a controlling shareholder.

Income and capital can be repatriated subject to compliance of below referred to regulations. Overnight overdrafts in IDR accounts are not permitted, and transfer of IDR to non-residents is regulated.

Key Regulation Matrix on FX for Foreign Party can be found here.

Acceptable Underlying

• Goods & Service Trading
• Investment

Unacceptable Underlying

• SBI Derivative TRX
• Fund Placement (any kind)

Prohibition 

• Credit / Facility
• IDR Placement / Equity Participation
• Structured Product

SANCTION 

• Administrative sanction 
• Financial sanction: 1% of violated transaction
• Nominal, at min IDR 10 Mio and at max IDR 1 Bio for each transaction

Key Regulation Matrix on FX for Foreign Party

a) Banks are prohibited from extending credit facility to Non Resident apart from for the following:

• Consumer loans which are utilised onshore .
• Bank guarantees related to investment activities in Indonesia .
• Credit cards
• Intra-day rupiah and foreign currency overdrafts, with certain requirements.

b) Buying of IDR is allowed up to the equivalent amount of the underlying trade. Exceptions are given where the small differences are due to payment of broker commission.

• The minimum holding period for SBI is 7 calendar days, effective from October 26.
• The minimum period for a repo sell and buy back transaction will be 28 calendar days
• In the case of NCBO (no change of beneficial owner) transfers of SBI from one sub-registry/custodian bank to another, the calculation of the holding period for the transferred SBI may be continued at the new sub-registry i.e. the holding period calculation does not need to start from zero again
• Sub-registries must administer SBIs held by their clients in accordance with the requirements in this regulation

Please note that Bank Indonesia (BI) will monitor the execution of SBI transactions to ensure compliance with the regulation. Where BI finds indications of a breach, it will send a written notification to the related participant and the participant must then respond to BI within three working days. If no response is received within this time, BI will deem the breach to be valid and penalties will apply. Penalties in the amount of 0.01% of the transaction value, minimum IDR 10 million, maximum IDR 100 million per day will apply.

Effective July 7, 2023, the purchase of foreign currency against IDR below USD 25,000, or equivalent, per month must be supported by a written statement confirming that the purchase of foreign currency does not exceed USD 100,000 per month. 

The purchase of Foreign Currency against IDR above USD 100,000 or equivalent per month is only permitted if supported by a valid underlying transaction and relevant supporting documentation. A declaration should also be provided as to state that the underlying document provided to the Bank is accurate and that the underlying document will only be used for FX purchasing against IDR with the maximum amount of the underlying transaction. The declaration letter can be submitted by way of authenticated message e.g. printed REUTERS, Bloomberg or SWIFT message. For custodian clients, a declaration can be submitted once in one calendar year. Calendar year is defined as the period from the month of January until December in one particular year. A fresh letter will be required for the following year. Note that the letter must be issued before the FX transaction takes place.

Non Residents are not allowed to enter into Derivatives transactions, including;

• Swap sell/buy foreign currency against IDR
• Call option sell/buy foreign currency against IDR
• Put option buy/sell foreign currency against IDR
• Other similar derivate products such as Non Deliverable Forward and etc.
• Outright forward sell/buy foreign currency against IDR.

IDR transfer into non-resident account for the amount up to USD 1 million are allowed without underlying transaction.

Exceptions:

a) Where derivatives are carried out for the purpose of protecting the value (hedging) of investments in Indonesia. The derivatives transaction should have a minimum tenor of 1 week.

The amount of the derivative transaction should not exceed the total market value of the portfolio at the time the transaction is entered into. The underlying portfolio should not be sold during the hedge period.

In addition the following documentary proof must be submitted to the Bank prior to executing the transaction;

• Statement of holdings
• Swift Receive versus Payment message

b) Hedging of future sell of IDR derived from investment income (Repatriation)

Hedging for income which have been received

1. Hedging must be done through placement of outright forward transactions with a minimum tenor of one week (7 calendar days). There is no limitation on the maximum tenor
2. The maximum hedging amount is as per the value of the underlying transaction (as evidenced by supporting docs)
3. Hedging can only be done once and can not be rolled over
4. Hedging must be supported by supporting documents showing how the income was received

Hedging for income which will be received in the future

1. Hedging must be done through placement of outright forward transactions with a minimum tenor of one week (7 calendar days) and maximum as per date of receipt of income
2. The maximum hedging amount is as per the value of the underlying transaction (as evidenced by supporting docs)
3. Must be supported by supporting documents with tenors matching the tenor of the hedge

Supporting documents for hedging related to receipt of income:

1. For income which has been received – proof of receipt of income e.g. MT566
2. For income to be received – proof of upcoming income such as entitlement reports or AGM results
3. Documents to be submitted on the day the hedge is entered intoHedging of future purchase of IDR for funding of investments (RVP) in Indonesia

C) Hedging of future purchase of IDR for funding of investments (RVP) in Indonesia

1. Hedging must be done through placement of outright forward transactions
2. Hedging tenor is as per the settlement schedule of the underlying transaction (i.e. can be less than 1 week)
3. Hedging start and maturity date must be equal to the underlying transaction’s settlement cycle
4. Must be supported by supporting documents

Supporting documents for hedging related to receipt of income:

1. For income which has been received – proof of receipt of income e.g. MT566
2. For income to be received – proof of upcoming income such as entitlement reports or AGM results
3. Documents to be submitted on the day the hedge is entered into

Supporting documents for purchase of IDR related to securities settlement :

1. Confirmation of purchase of securities e.g. brokers conformation to be submitted on trading date, and
2. RVP instructions to be submitted on Value Date of the hedge

d) Hedge for IPO transactions: Placements of hedging to sell IDR is allowed to protect against market risk for unallocated IDR in the case where the IPO order is not 100% fulfilled; Hedging must be done through placement of outright forward transactions with a minimum tenor of one week (7 calendar days).

Supporting documents for hedging related to IPO transactions

1. Supporting document showing proof of investment e.g. Order Form and
2. Proof of fund placement for the IPO, or
3. Other documents showing proof of investment plans e.g. invoice / sale and purchase agreement
4. Documents to be submitted on the day the hedge is entered into

All hedging activities must be supported by Declaration Letters containing the following details :

1. Investor’s name and identity
2. Hedge counterparty Bank name
3. Nominal amount of the hedge
4. Statement from the investor stating that the underlying documents will not be used to enter into other hedge transactions within the Indonesian Banking industry

The new Regulation states that declaration letter is to be submitted on trade date and is valid for 1 calendar year.

There is no specific order to process cash payments in the Indonesian market except that high value payments of IDR 500 million and above are processed through RTGS (Real Time Gross Settlement). Minimum payment for RTGS is IDR 100 million. Smaller values are normally processed through SKN Sistem Kirling Nasional (National Clearing System). The RTGS system is an electronic real time payment system. 

Scripless settlement payments - scripless settlement involves the movement of funds between the cash accounts of custodians/brokers held at the applicable payment banks. KSEI will credit/debit the appropriate participant's cash account held at KSEI to facilitate trade settlement. The funds from scripless delivery transactions will be remitted back to clients cash account on SD. 

Settlement under the net settlement system - a net settlement system exists for scripless transactions, particularly between clearing participants (i.e. brokers vs. KPEI/Indonesian Clearing and Guarantee Corporation). Custodians are not directly involved in these systems, so transactions between custodians and brokers are settled on a trade-for-trade basis.

In November 2015, Bank Indonesia implemented the second generation of the following Bank Indonesia’s systems:

• BI-RTGS (Bank Indonesia Real Time Gross Settlement System)
• BI-S4 (Bank Indonesia Scripless Securities Settlement System)
• BI-ETP (Bank Indonesia Electronic Trading Platform)

Bank Indonesia also introduced new payment system called as BI - FAST (Bank Indonesia - Fast Payment) from November 12, 2021. BI-FAST is Bank Indonesia system payment infrastructure to facilitate retail payment which can be accessed and available anytime (24/7). 

Non-resident accounts are not allowed overdrafts.

Stock dividends are received in book-entry form. Cash Dividend proceeds are paid by Central Depository by crediting the local custodian's account in C-BEST. Custodian Banks then do wire transfer from C-BEST account to Payment Bank then instruct Payment Bank to remit the cash proceed to SCB via RTGS (Real Time Gross Settlement system owned by BI – Central Bank).

Dividends are usually paid annually (occasionally quarterly) on the specified payment date net of withholding tax from the issuer or its paying agent.

Interest on state companies and corporate bonds are made on a variable basis depending on the type of instrument. Payments are made net of withholding tax.

In general, interest is calculated on a 360-day basis, however some instruments may have interest calculation on a 365 day basis.

Government bonds - effective September 1, 2010 number of days used for the calculation changed from the standard 30/360 convention to using the actual/actual method.

There has been a recent trend developing in the Indonesian Capital Market where some issuers have begun to impose restrictions on participation of the event by introducing additional conditions such as;

• The requirement to submit QIB (Qualified Institutional Buyer) certifications and Investor Representation Letters for US investors
• Prohibition to participate for investors located in certain countries

The above restrictions are based on the regulations in the investor's domicile country which may prohibit them from participating in overseas Rights Issuance events.

Equities, rights and entitlements are protected based on settled position at the latest at book close date. For fixed income, however, once trades are done (in the majority of the times OTC), rights and entitlements are protected on settled positions.

Unrestricted voting rights.

No.

Provided in English or Bahasa Indonesia. Annual general meetings and extraordinary general meetings are announced one month in advance. The meeting schedule and agenda will be published two weeks before the meeting date.

Outcome advised within 24 hours after the public announcement.

On request, subject to availability.

Required.

Not applicable.

For non resident tax payer, the tax rate applied is 20% withholding tax, or as per Double Tax Treaty rate (as long as Certificate of Domicile or other required form is provided).

10%

Effective August 2, 2021, the tax rate applied for Bond interest income decreased to 10% from 20%.

Non-resident tax payers with no DGT form in place 10% tax rate will be applied for Bond interest income. If the non-resident taxpayer has a DGT form in place, and the tax treaty rate is lower than 10%, the lower tax treaty rate applies. The tax rate applied for bond interest income for Non-resident taxpayer with a DGT form in place and the tax treaty rate is higher than 10%, 10% tax rate applies.

Foreign investors are exempted from capital gains tax on equities listed and traded on the stock exchange (IDX). However, a sales income tax of 0.1% is practically applied in flat rate on all sale transactions.

Technically Capital Gains Tax on bonds is applied in Indonesia. Notwithstanding that, regulatory definition has construed the differences between the sales and purchase price as discount, hence they are taxable under the Withholding Tax regime, whereas for non resident tax payer, the tax rate applied is 20% withholding tax or as per Double Tax Treaty rate (as long as Certificate of Domicile or other required form is provided).

The definition of bonds has been clarified to include Corporate bonds and Government bonds with a maturity of more than one year. Thus, the withholding tax on bonds trading are applied on:

• Interest including accrued interest from Interest bearing bond (based on actual holding period) and
• Discounts (difference between acquisition price and sale price at transaction or difference between nominal value and acquisition price).

The authorities have issued Regulation Number 07/PMK.011/2011 on January 13^th, 2012 which serves as an amendment to the previously issued i.e. PMK 85 issued in May 2011.
Salient point of the changes as below

As per MoF Regulations PMK 85 issued in May 2011, taxes on accrued interests may not be offset against capital losses made on the selling of the Bonds. Therefore, taxes on the interest will be applied on the full interest amount.
Tax on SBIs (Sertifikat Bank Indonesia / Bank Indonesia Certificates). Under the local tax law (Government Regulation No.131 Year 2000), if SBI holder (not a Bank located in Indonesia and not a Pension Fund approved by Minister of Finance) sells SBI to another party, the difference between the nominal value and the sale price constitutes a capital gain and is not subject to 20% final tax or tax treaty rate. However, if the SBI holder is a bank located in Indonesia (including a branch of foreign banks in Indonesia) and Pension Fund approved by Indonesian Minister of Finance, the bank/ the pension fund has an obligation to withhold the 20% tax or tax treaty rate (as long as Certificate of Domicile or other required form is provided) on the difference between the nominal value and the sale price received by the respective non resident tax payer.

There is a consensus in the market that sale of SBI in the first secondary market (the seller of the SBI is the local bank/ pension fund as mentioned above) is considered as primary market and thus withholding tax should be imposed on the discount (difference between selling price and nominal value). For treaty countries (as long as Certificate of Domicile or other required form is provided), the WHT treatment will refer to the relevant tax treaty between Indonesia and those countries. For non tax treaty countries, it will refer to the local tax law.

Treasury Bill (SPN) is clarified as Government Debt Securities with a maturity of no more than 12 months. Pursuant to the prevailing tax regulations, the difference between nominal price at maturity and purchasing price (in primary market), the difference between selling and purchasing price (in secondary market) and the difference between the par value and the acquisition costs of the last investor (at maturity) will be subject to withholding tax. For non resident tax payer, the withholding tax rate is 20% or the relevant tax treaty rate (as long as Certificate of Domicile or other required form is provided).

Please note that as per prevailing regulations, certain local entities are exempted from withholding tax.

Stamp duty of IDR 10,000 is paid on all cash statements, and corporate action voting forms.

Value-add Tax (VAT)

The VAT rate increased from the initial rate of 10% to VAT rate of 11% from April 1, 2022.

INDONESIA Holiday Calendar

• Indonesia Stock Exchangeidx.co.id
• Capital Market Supervisory Agencybapepam.go.id
• PT Kustodian Sentral Efek Indonesiaksei.co.id
• Central Bank of Indonesiabi.go.id
• Indonesian Clearing & Guarantee Corp.kpei.co.id
• Jakarta Future Exchangebbj-jfx.com
• Indonesian Ministry of Financedepkeu.go.id
• Otoritas Jasa Keuangan (Financial Services Authority) www.ojk.go.id