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ndonesian authorities seem keen to show they are keeping up with technological innovation, as Bank Indonesia (BI) suddenly came up on Friday evening with a policy requiring all payment service companies to report their acquisition plans.

The central bank’s announcement came just a day after Indonesia’s biggest ride-hailing service, Go-Jek, agreed to acquire three local financial technology (fintech) companies, prompting speculation that BI’s move was made in a rush.

In a statement circulated on Friday evening, BI stressed that the requirement for payment service providers to report acquisition plans was part of its efforts to strengthen consumer protection.

However, the central bank specifically mentioned the “Gopay application provider” — which is owned by Go-Jek — as one payment service that already had permits for electronic money and fund transfer services.

BI executive director of communications Agusman said the central bank would conduct further investigation on the acquisition Go-Jek had announced a day earlier. In other words, without BI permission, the acquisition plan will go nowhere.

“It [investigation] is in accordance with BI’s supervision duty to ensure that business activities are permitted and comply with regulations,” he said in the statement, adding that BI would also look at the ownership structure.

Institute for Development of Economics and Finance (INDEF) researcher Bhima Yudhistira expressed concern that such a requirement, and more likely to come in the future, would hamper the growth of start-ups in Indonesia, the very companies making many people’s lives easier through innovation.

“If the regulation only requires [companies] to report, it won’t be a problem. However, in my opinion, the words ‘further observation’ sound like a catch-all phrase,” he said on Sunday.

Bhima said he feared that, with regard to Go-Jek’s acquisition plan, the policy would disrupt the process of integration between the acquired companies. “Acquisition is not that simple. If BI wants to conduct an investigation, then this intervention can disturb the whole process.”

He said he suspected the policy was related to the proposed foreign ownership cap in BI’s recently launched National Payment Gateway (NPG) program, which aims to build a local payment service network.

“[The program is designed] with the expectation that fintech companies in Indonesia are not controlled by foreign players,” he said.

“Also, [it is] to protect conventional players, so there is a level playing field.”

BI Regulation No. 19/2017 on NPG stipulates that institutions providing switching services should be at least 80 percent owned by local individuals or companies.

According to a Bloomberg report published Friday, Go-Jek has finalized a deal that brings together Kartuku, Indonesia’s largest offline payment-processing company; Midtrans, the nation’s top online payment gateway; and Mapan, a local community-based saving and lending network.

Collectively, Go-Jek and the three companies now process almost US$5 billion of debit card, credit card and digital-wallet transactions for their customers, service providers and merchants.

Meanwhile Indonesian Information and Communication Technology (ICT) Institute founder Heru Sutadi said BI’s requirement was a “substantial measure” that should be taken into consideration whenever an acquisition occurred.

He said the impact of consolidation, acquisition and mergers had to be assessed carefully, especially with regard to the acquired company and its employees as well as whether it would affect market competition.

“I think the policy is needed, but the process must be quick, so the industry also has assurance,” he said, adding that BI had to conduct the investigation as soon as possible.

Bhima of INDEF voiced a similar opinion, saying the authorities should provide assurances to industry players by engaging them in intense dialogue, especially start-ups, as the country had entered the era of deregulation. (srs)