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Indonesia: Circulars Issued on Bank Accounts for Foreigners, Other Financial Services

(Sept. 18, 2015) Indonesia’s Financial Services Authority has recently issued a number of regulations and circulars, including a Regulation on Framework Provisions on the National Economic Stimulus for Banks (Regulation No. 11/POJK.03/2015) and a Regulation on Framework Provisions of the National Economic Stimulus for Islamic Banks and Sharia Businesses (Regulation No. 12/POJK.03/2015, in addition to Circular No. 25, 2015) and Circular No. S-246/S.01/2015, containing rules for foreigners who open accounts in local banks (see below for details). (Press Release, OJK Terbitkan Aturan Pembukaan Rekening Bagi WNA [Financial Services Authority Publishes Rules for Foreigners Opening Accounts], Financial Services Authority website (Sept. 14, 2015).)

In addition, the Authority has recently issued rules for insurance companies (Circular No. 24, 2015) and pension funds (Circular No. 26, 2015) that are designed to lessen the effect of global financial conditions on those businesses. (Id.)

Circular on Foreigners’ Banks Accounts

Muliaman D. Hadad, the head of Indonesia’s Financial Services Authority, issued the Circular containing rules for foreigners who open foreign exchange savings accounts in Indonesian banks on September 15, 2015. (Id.; Policy Issued to Ease Restrictions on Foreigners’ Bank Accounts, JAKARTA POST (Sept. 16 2015).)

According to Hadad, the Circular is consistent with the group of economic policy reforms announced on September 9 that have the goal of stimulating economic development. (Policy Issued to Ease Restrictions on Foreigners’ Bank Accounts, supra; Constance Johnson, Indonesia: Economic Deregulation Planned, GLOBAL LEGAL MONITOR (Sept. 14, 2015).)

Before the issuance of the Circular, foreigners wanting to open accounts had to produce numerous documents, including their passports and Temporary Residence Permit Cards. Easing these rules is designed to attract deposits of foreign currency in the Indonesian banking system, as well as to increase the number of foreigners investing in and traveling to the country. (Press Release, supra.)

Tourists will now be allowed to open dollar savings accounts in amounts of between US$2,000 and $50,000 by presenting just a copy of a passport; however, those accounts with relatively low balances within this range may be subject to higher fees for the service. Expatriates residing in Indonesia can open accounts with higher amounts of funds by providing a copy of a passport and one additional document, which could be a letter of reference from another bank, a letter stating that the person has a local home, or a copy of identification documents of an Indonesian spouse, among other kinds of possible documentation. The Circular also provides for special accounts for foreigners that carry balances over US$1 million; these accounts are eligible for lower tax rates on interest earnings. (Id.; Policy Issued to Ease Restrictions on Foreigners’ Bank Accounts, supra.)