LEGAL GUIDE FOR INDONESIAN FINTECH PLAYERS: MAPPING THE APPLICABLE REGULATIONS FOR YOU
Confused about what laws and regulations in Indonesia apply to your fintech? Read our guide to map them based on what is applicable for the services offered by your fintech.
Do : Know that there are 6 (six) types of applicable regulations for Fintech in Indonesia.
Don’t : Ignore them due to some sort of “my product is new and unique and therefore not yet regulated in Indonesia” logic. Or worse, try to find loopholes.
Do : Be SMART and take gradual steps to make sure you comply before your competitors do.
Don’t : Overstress yourself thinking all of the regulations apply to your Fintech. Unless you are trying to become a multi-finance company, or a bank, chances are they don’t all apply to you.
The common myth of “there are no regulations which properly regulates Fintech in Indonesia” has been recently debunked by OJK’s timely breakthrough on the P2P Lending platform services. Even so, it benefits all Fintech players to know what regulations are applicable for their services in Indonesia, and make sure to put some effort (because we all know Rome is not built in a day, much less Jakarta) into gradual compliance.
Here are the 6 (six) types of applicable regulations for Fintech in Indonesia:
- Regulations on Electronic System and Services
This applies to Fintech business model which includes collecting and storing customer information, as well as providing electronic public service.
Governing Body: Ministry of Trade, Government
The Thing to Know: Mostly applies to Government institutes / bodies operating an electronic-based public service system. However, best to register your electronic system and services at the Ministry of Communication and Information just to make sure.
- Regulations on Information and Data Protection
This applies to Fintech business model which includes collecting and storing customer information, as well as providing electronic public service.
Governing Body: Ministry of Communication and Informatics, Bank Indonesia, Ministry of Law, Central Bureau of Statistics, Indonesian Financial Transaction Reports and Analysis Center
The Thing to Know: Personal Information Protection is now regulated in detail by Ministry of Communication and Informatics Regulation No. 20 of 2016.
- Regulations on Technology and Data Centers
This applies to Fintech business model which utilizes domestic or overseas data centers.
Governing Body: Ministry of Communication and Informatics, Bank Indonesia
The Thing to Know: The obligation to place your data centers and data recovery centers in Indonesia is real, and you better comply before 2018.
- Regulations on Outsourcing
This applies to Fintech business model which provides services to other businesses, and/or use services provided by other businesses in order for the Fintech to operate.
Governing Body: Government, Bank Indonesia
The Thing to Know: Outsourcing in Indonesia is only allowed for non-core business activities, so make sure that you don’t outsource your IT guy. A great template of Employment Contract (pursuant to Indonesian laws) goes a long way for your company.
- Regulations on Customer Protection
This applies to Fintech business model which includes collecting and storing customer information, especially regarding personal information.
Governing Body: Ministry of Communication and Informatics, Bank Indonesia
The Thing to Know: Be clear when drafting your T&C to be displayed, and keep the standard clauses, waivers, and your non-responsibility to a minimum. Make sure you have a clear procedure of settlements in the event of disputes or other troubles.
- On Specific Activities (E.g. Payment, P2P Lending)
This applies to Fintech business model which provide specific services, such as payment services and lending services. These regulations are the ones commonly known as Fintech regulation, which is partly true because they specifically regulate Fintech, but that doesn’t mean that without them, Fintech in Indonesia is in a world without any rules.
Governing Body: Bank Indonesia, OJK
The Thing to Know: Both Bank Indonesia and OJK now has a specialized department to deal with Fintech called the Fintech Office, which works closely with the Fintech Association. Stay up to date with the newest regulations, and attend their workshops to understand more regarding the Fintech climate in Indonesia.
Sometimes, a startup’s biggest enemy is not its investors or its own management, but its own legal team, which can be its most vocal dissenter (and one of the most daunting, with their knowledge of laws and regulations) which can cause so many obstacles that your project never takes off. This is why it is important for Fintech and other tech startups to have a general idea on which regulations apply to them in Indonesia, and how it impacts their business in practice.
Find a legal team that is willing to grow together with your company, and Indonesia’s own framework of Fintech regulations.
HOW CAN SMART CONSULTING HELP YOU?
To ensure a smooth investment and business operation from the legal perspective, but also still focus on maintaining your business in Indonesia and reach your revenue target, it is advised for you to find capable and trusted lawyers or legal consultants for advice and assistance in ensuring your legal compliance with prevailing laws and regulations.
SMART Consulting is an Indonesian Corporate Legal Services firm. Our experience and dynamic firm value assist Clients in staying up-to-date with the newest Indonesian laws and regulations, including for Fintech Players looking to secure or establish their businesses in Indonesia. SMART also assists Clients looking for clarification with the relevant Government Authorities in the financial technology business sector, including Ministry of Communication and Informatics, Bank Indonesia, and OJK.
Contact Us Now to get your legal solution for your business goals, and still comply with the prevailing laws and regulations.
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