TheJakartaPost
Please Update your browser
Your browser is out of date, and may not be compatible with our website. A list of the most popular web browsers can be found below.
Just click on the icons to get to the download page.
New regulation needed to shape foreign ownership limits
The regulation of foreign ownership is critical to ensuring that foreign investment contributes to economic growth while protecting domestic businesses and maintaining national sovereignty over financial regulations.
Change text size
Gift Premium Articles
to Anyone
Share the best of The Jakarta Post with friends, family, or colleagues. As a subscriber, you can gift 3 to 5 articles each month that anyone can read—no subscription needed!
A person receives a message from the Financial Services Authority (OJK) on Sept. 10, 2023, asking citizens to be wary of online lending platforms. (Antara/Cahya Sari)
T
he government is currently in the process of drafting a new regulation to govern foreign ownership in the financing services sector. The proposed regulation, titled Government Regulation on Foreign Ownership in Financing Services Businesses, aims to restore government control over foreign ownership limits, which were previously regulated by the Financial Services Authority (OJK).
This move is part of the implementation of Law No. 4/2023 on the development and strengthening of the financial sector (P2SK Law), which requires the government to issue implementing regulations within two years of its enactment. The deadline for finalizing the regulation is set for Jan. 12, 2026, to avoid a potential legal vacuum.
The financing services businesses (UJP) sector encompasses a wide range of financial services, including financing companies, venture capital companies, infrastructure financing companies, peer-to-peer lending (P2PL) and pawnshops.
The regulation of foreign ownership in this sector is critical to ensuring that foreign investment contributes to economic growth while protecting domestic businesses and maintaining national sovereignty over financial regulations.
One of the most pressing concerns of the draft regulation is the risk of a legal vacuum if the regulation is not finalized by the Jan. 12, 2026, deadline.
The P2SK Law does not provide transitional arrangements for foreign ownership in financing services businesses, meaning that if the implementing regulations are not issued in time, there could be uncertainty and potential disruptions in the sector. The draft regulation aims to prevent this by providing clear guidelines for foreign ownership.
Foreign ownership is expected to bring in much-needed capital, technology and improved governance to the financing services businesses sector. These benefits are crucial for the sector's expansion and innovation, particularly in areas such as infrastructure financing and P2P lending. Additionally, foreign investment is expected to create jobs and promote healthy competition, which will ultimately benefit the Indonesian economy.
