Indonesia Treasury Management Profile 2018 - Together we thrive - HSBC Group

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Indonesia Treasury Management Profile 2018 - Together we thrive - HSBC Group
Indonesia
Treasury Management
Profile 2018

                      Together we thrive
Indonesia Treasury Management Profile 2018 - Together we thrive - HSBC Group
2                                HSBC Treasury Management Profile 2018 | Indonesia   HSBC Treasury Management Profile 2018 | Indonesia                                                                                                                    3

Contents                                                                             Introduction and
                                                                                     Purpose

Introduction and Purpose   3                                                        Indonesia
                                                                                     This is one of a series of Treasury Management Profiles designed for finance and treasury professionals worldwide. By providing a
Legal and Regulatory       6                                                        snapshot of banking, payments and cash management in selected locations, these profiles can help treasury managers to make
                                                                                     informed decisions, manage risks effectively and take advantage of new opportunities. However, this information is not intended to
Taxation10                                                                          be comprehensive and does not constitute financial, legal, tax or other professional advice. Accordingly you should not act upon the
                                                                                     information contained in this document without obtaining your own independent professional advice. The materials contained in this
Banking15
                                                                                     document were assembled in May 2017 (unless otherwise dated) and were based on the law enforceable and information available
Payment Instruments        16                                                       at that time.

Payment Systems            20
                                                                                       Facts and Figures
Cash Management            23                                                        Capital/Other major cities: Jakarta/Surabaya, Medan,                                  National holidays:                     2019 — 1 Jan, 5 Feb, 7* Mar,
                                                                                                                  Bandung, Semarang                                         Source: www.goodbusinessday.com.       3*, 19 Apr, 1, 20*, 30 May,
Electronic Banking         24
                                                                                                                                                                                                                   1, 5*, 6* Jun, 12*, 17 Aug,
                                                                                      Area:                                  1,904,569km2
                                                                                                                                                                                                                   1 Sep*, 10 Nov*, 25 Dec
Trade Finance              26
                                                                                      Population:                            258.32m
Useful Websites            28                                                        Languages:                             Bahasa Indonesia (official),                   Business hours:                        08:00/09:00–16:00/17:00
                                                                                                                             English, local dialects                                                               (Mon–Fri)
                                                                                      Currency:                              Indonesian rupiah (IDR)                        Banking hours:                         08:00–15:00 (Mon–Fri)
                                                                                      Country telephone code:                62                                             Stock exchange:                        Indonesia Stock Exchange (IDX)
                                                                                      Weekend:                               Saturday and Sunday                            Leading share indices:                 JSX Composite, Jakarta Islamic
                                                                                                                                                                                                                   index (JII)
                                                                                      National holidays:                     2018 — 1 Jan, 16 Feb,
                                                                                      Source: www.goodbusinessday.com.       17*, 30 Mar, 14 Apr*,                          Sectoral distribution                  Agriculture 13.7%,
                                                                                                                             1, 10, 30* May, 1, 15*, 16* Jun,               of GDP (% of GDP):                     Industry 40.3%,
                                                                                                                                                                            Source: https://www.cia.gov/library/
                                                                                                                             17, 22* Aug, 12 Sep*, 21 Nov*,                                                        Services 46% (2016 estimate)
                                                                                                                                                                            publications/resources/the-world-
                                                                                                                             25 Dec                                         factbook/index.html.

                                                                                     * The date shown may vary by plus or minus one day. These dates are derived by converting from a non‑Gregorian calendar (e.g., Muslim or Hindu) to the Gregorian
                                                                                     calendar. Some of these dates cannot be determined in advance with absolute accuracy, even by the governing authorities. In the case of Muslim dates in particular, the
                                                                                     feast days are determined by the sighting of a new/full moon.

                                                                                     Government                                                                           ®® House of Regional Representatives: 132 members are directly
                                                                                     Legislature                                                                             elected to serve one five‑year term.
                                                                                     Presidential republic with a bicameral People’s Consultative
                                                                                     Assembly (Majelis Permusyawaratan Rakyat) composed of                                The next general election is scheduled to be held in 2019.
                                                                                     the House of People’s Representatives (Dewan Perwakilan
                                                                                     Rakyat) and the House of Regional Representatives (Dewan                             Head of state and political leader
                                                                                     Perwakilan Daerah).                                                                  Joko Widodo, president (head of state and government) since 20
                                                                                                                                                                          October 2014.
                                                                                     ®® House of People’s Representatives: 560 members are elected
                                                                                        to serve five-year terms.                                                         ®® The president is elected every five years. The next presidential
                                                                                                                                                                             elections are scheduled to be held in September 2019.
Indonesia Treasury Management Profile 2018 - Together we thrive - HSBC Group
4                                                                                               HSBC Treasury Management Profile 2018 | Indonesia                     HSBC Treasury Management Profile 2018 | Indonesia                                                                                                            5

                                                                                                                                                                                                                                                           Country credit rating
                                                                                                                                                                                                                                                           Fitch Ratings rates Indonesia for issuer default as:

                                                                                                                                                                                                                                                            Term                                 Issuer Default Rating

                                                                                                                                                                                                                                                            Short                                F3

                                                                                                                                                                                                                                                            Long                                 BBB –

                                                                                                                                                                                                                                                            Long-term rating outlook             Positive
                                                                                                                                                                                                                                                                                          Source: www.fitchratings.com, October 2017.

                                                                                                                                                                      Exchange rate & Interest rate (%)                                                    Consumer inflation & GDP volume growth (%)
    Economy                                                                                                                                                                    Indonesia                                                                         Indonesia

                                                                                                                              2017
                                                  2010      2011      2012      2013      2014        2015        2016                                                16,000                                                                      16,000   6.5                                                               6.5
                                                                                                                              Q1           Q2          Q3

    Exchange rate* (IDR/USD)**                    9,090.4   8,770.4   9,386.6   10,461.2 11,865.2     13,389.4    13,308.3    13,348.4     13,309.3    13,329.1
                                                                                                                                                                      12,000                                                                      12,000   5.5                                                               5.5

    Interest rate (MMR)** (%)                     6.01      5.62      4.01      4.83      5.85        5.83        4.80        NA           NA          NA

    Unemployment (%)                              7.3       6.7       6.2       5.9       5.8         6.0         5.6         NA           NA          NA              8,000                                                                      8,000    4.5                                                               4.5

    Consumer inflation*** (%)                     + 5.1     + 5.4     + 4.3     + 6.4     + 6.4       + 6.4       + 3.5       + 3.6        + 4.3       + 3.8
                                                                                                                                                                       4,000                                                                      4,000    3.5                                                               3.5

    GDP volume growth*** (%)                      + 6.2     + 6.2     + 6.0     + 5.6     + 5.0       + 4.9       + 5.0       + 5.00       NA          NA

    GDP (IDR tr)                                  6,447     7,832     8,616     9,546     10,566      11,541      12,407      –            –           –                00.0                                                                      00.0     2.5                                                               2.5

                                                                                                                                                                                    2012          2013       2014         2015         2016                           2012         2013   2014         2015        2016

    GDP (USD bn)                                  709       893       918       913       890         862         932         –            –           –
                                                                                                                                                                                 Exchange rate (INR/USD)                                                           Consumer inflation %
    GDP per capita (USD)                          2,947     3,663     3,701     3,632     3,500       3,347       3,569       –            –           –
                                                                                                                                                                                 Interest rate (MMR)                                                               GDP volume growth %

    BoP (goods/services/income) as % GDP          + 0.1     – 0.3     – 3.1     – 3.6     – 3.7       – 2.7       – 2.2       –            –           –
    * Official rate. ** Period average. ** Year on year.                         Sources: IMF, International Financial Statistics, November 2017 and 2017 Yearbook.   Sources: IMF, International Financial Statistics, November 2017 and 2017 Yearbook.
Indonesia Treasury Management Profile 2018 - Together we thrive - HSBC Group
6                                      HSBC Treasury Management Profile 2018 | Indonesia          HSBC Treasury Management Profile 2018 | Indonesia                                                                                        7

Legal and
Regulatory

    Non-resident            Central bank                                                          Reporting                                                             transactions; domestic currency transfers to an account held by a
                            Bank Indonesia is an autonomous institution operating in              All transactions between residents and non-residents must             non-resident (or jointly held account) and a resident at a domestic
                            accordance with Act No 23 of 1999 of the Republic of Indonesia        be reported to Bank Indonesia on a monthly basis. Resident            or foreign bank, except for economic activities in Indonesia; or

    bank accounts           (the Central Bank Law) and its amendments.                            companies must also report all transactions on resident foreign
                                                                                                  exchange accounts held abroad no later than the 15th day of the
                                                                                                                                                                        between accounts held by the same non-resident.

                                                                                                                                                                        Resident banks are not permitted to grant credit to non-residents
                            Bank supervision

    are permitted in
                                                                                                  subsequent month.
                            The Financial Service Authority (OJK) supervises the banking                                                                                unless they are a lending syndication led by an offshore prime
                            sector in Indonesia.                                                  Non-financial companies must report all foreign exchange              bank or the lending is in the form of credit cards or personal loans

    both foreign and
                                                                                                  transactions below USD 1,000, or its equivalent, on an                that are to be utilised domestically.
                            Resident/non-resident status                                          aggregated basis. Payments above USD 1,000, or its equivalent,
                            A company is considered resident in Indonesia if it is incorporated   must be reported individually. All details of netting and/            Foreign currency purchased against the IDR must be supported

    domestic currency.      in or domiciled in Indonesia.                                         or offsetting funds with affiliate companies abroad must be           by an underlying economic transaction if it exceeds USD 100,000
                                                                                                  reported.                                                             per month.
                            Bank accounts

    Non-residents are       Resident
                            Foreign exchange accounts can be held by residents both
                                                                                                  Reporting requirements apply to all companies with total assets
                                                                                                  in excess of IDR 100 billion or annual sales in excess of
                                                                                                                                                                        All capital transactions are regulated by Bank Indonesia and the
                                                                                                                                                                        Commercial Offshore Loan Team (COLT). All borrowing activities
                                                                                                                                                                        must be reported.
                            domestically and abroad. No cheques may be drawn on foreign

    restricted to holding
                                                                                                  IDR 100 billion.
                            exchange accounts. Resident domestic currency (IDR) accounts
                            cannot be held abroad, but are freely convertible into foreign        Banks are responsible for submitting transactions data to Bank        A customs declaration and prior approval from Bank Indonesia
                                                                                                                                                                        is required to import or export over IDR 100 million in domestic

    current, savings
                            currency.                                                             Indonesia on behalf of their clients, although the accuracy of all
                                                                                                  reported information remains the client’s responsibility. Data is     currency banknotes.
                            Non-resident                                                          submitted via monthly Foreign Exchange Flow (FEF) reports.

    and time deposit
                            Non-resident bank accounts are permitted in both foreign and                                                                                All export proceeds must be received via a foreign exchange bank,
                            domestic currency. Non-residents are restricted to holding            Exchange controls                                                     although there is no obligation to keep these funds in a domestic
                            current, savings and time deposit accounts. Non-resident              The Indonesian rupiah (IDR) is Indonesia’s official currency.         bank and no restriction on subsequent transfers abroad. Profits

    accounts.               domestic currency accounts are freely convertible into foreign
                            currency.                                                             ®® Foreign exchange controls are administered by
                                                                                                                                                                        earned abroad are not required to be remitted back to Indonesia.

                                                                                                                                                                        Non-resident investment in infrastructure projects such as power
                                                                                                     Bank Indonesia. There are limited exchange controls; the IDR is
                            A transfer in IDR to a non-resident account is only permitted            freely convertible.                                                and electricity generation, shipping, airlines, telecommunications,
                            as part of an underlying economic transaction. Non-residents                                                                                railways and seaports should be made via joint-venture
                            must submit statements to their banks in order to receive such        Forward contracts against IDR offered by domestic banks to            companies with a minimum 5% Indonesian ownership. Non-
                            payments.                                                             non‑residents are restricted to a maximum value of USD 1 million,     resident investment in banks is limited to 99%.Non-resident
                                                                                                  unless there is some underlying investment activity.                  investment in other sectors can be 100%.
                            Interest can be offered on current accounts. Overdraft facilities
                            are available to resident entities only.                              Onshore banks in Indonesia are prohibited from carrying out           Indonesia is a member of the Association of Southeast Asian
                                                                                                  certain transactions with non-residents including: the provision of   Nations (ASEAN), and a participant in the ASEAN Swap
                                                                                                  overdrafts; the placement of domestic currency funds; purchases       Arrangement and the Bilateral Swap Arrangements under
                                                                                                  of most non‑resident issued domestic currency securities,             ASEAN+3.
                                                                                                  with the exception of securities related to import or export
8                                                                                HSBC Treasury Management Profile 2018 | Indonesia          HSBC Treasury Management Profile 2018 | Indonesia   9

Anti-money laundering/counter-terrorist financing1                     is being opened solely for the purpose of paying salaries. Banks
Indonesia has implemented anti-money laundering and counter-           must identify the customer’s profile, business activities and
terrorist financing legislation. Notable legislation includes:         ownership structure, as well as any other information that may
                                                                       be used to measure the risk level of the customer. They must
®® Law No 1 of 2002 on Eradication of Terrorism;                       also conduct ongoing monitoring of the relationship, including
®® Law No 8 of 2010 Concerning the Prevention and Eradication          ensuring that transactions are consistent with the customer’s
   of the Crime of Money Laundering;                                   business and risk profile.
®® Law on Amendment of Article 3, Article 29 and Article 30 of
   the Law on Anti-Money Laundering and Combating Financing            Cash transactions exceeding IDR 500 million, or a series of
   of Terrorism 2013;                                                  transactions aggregating to a value above IDR 500 million, or its
®® Sub‑Decree on Freezing of Property of Designated Terrorists         equivalent in foreign currency, within one business day, must be
   and Organisations 2014; and                                         reported to the PPATK.
®® Government Regulation No 43 of 2015.                                Financial institutions in the broadest sense must record and
                                                                       report suspicious transactions within three working days of their
A number of Ministry of Finance decrees and Bank Indonesia
                                                                       discovery to the PPATK.
regulations have also been issued, including the Regulation
Concerning the Implementation of Anti-Money Laundering                 All records must be kept for a minimum of five years after the end
and Combatting the Financing of Terrorism Programme for                of the business relationship.
Commercial Banks 2009. The Supreme Court has also issued
related Circulars.                                                     All cross-border currency transactions must be reported to the
                                                                       Directorate General of Customs and Excise. Individuals carrying
Indonesia is a member of the Asia/Pacific Group on Money               cash and/or other negotiable instruments of IDR 100 million or
Laundering (APG). The Indonesian Financial Transaction Reports         more into or out of Indonesia must also declare this to customs.
and Analysis Centre (PPATK), the country’s financial intelligence
unit, is a member of the Egmont Group.

Account opening procedures require formal identification of the
account holder and beneficial owners. However, precise due
diligence requirements vary between sectors.

Banks must apply customer due diligence procedures when
engaging in business relationships, including with ‘walk-in
customers’ when the transaction is equal to or greater than IDR
100 million. Simplified due diligence procedures apply in some
instances, such as if a company is publicly listed, or if an account

1.
     Data as at January 2017.
10                                                                                HSBC Treasury Management Profile 2018 | Indonesia                       HSBC Treasury Management Profile 2018 | Indonesia                                                                                                              11

Taxation
                                             1

Resident/non-resident                                                Resident companies deriving income from foreign sources are
                                                                                                                                                           Withholding tax (subject to tax treaties)
Companies incorporated or domiciled in Indonesia are resident for    entitled to a unilateral tax credit with respect to foreign tax paid
tax purposes. Foreign companies that are not legally resident in     on the income. The credit is limited to the amount of Indonesian                                                                                                                                       Technical
                                                                                                                                                           Payments to:                                               Interest           Dividends            Royalties                        Branch remittances
Indonesia, yet have a permanent establishment (PE) in Indonesia,     tax payable.                                                                                                                                                                                           service fees
are taxed on their profits as if they were resident.
                                                                     Dividends received or derived by a resident company from                              Resident companies                                         15%/20%            10%/15%              15%           2–10%              NA
Tax authority                                                        a participation in an Indonesian limited liability company are                        Non-resident companies             *
                                                                                                                                                                                                                      20%                20%                  20%           20%                20%
®® Director General of Taxation.                                     exempt from tax if the recipient holds at least 25% of the shares
                                                                                                                                                           * May be subject to reduced rates under tax treaties, subject to submission of forms DGT-1 or DGT-2.
                                                                     of the payer and the dividends are distributed from retained
Tax year/filing                                                      earnings.
The tax year is the calendar year. Businesses may elect to
substitute their financial year, but it must be exactly 12 months    Losses can be carried forward for a maximum of five years (up                        ®® Up to a 50% corporate income tax reduction for taxpayers                              Capital gains tax
long.                                                                to ten years for some industries or remote locations that have                          in the telecommunications, information and communication                              Capital gains are taxable as ordinary income and capital losses
                                                                     obtained government approval in relation to tax incentives).                            sectors that introduce high technology with a minimum                                 are tax-deductible. Gains from certain transactions are taxed
The monthly tax instalment system is a self-assessment system,       Losses cannot be carried back.                                                                                                                                                under a special regime (e.g. gains from the disposal of land and/
                                                                                                                                                             investment value of IDR 500 billion, but less than IDR 1 trillion;
with tax due on the 15th day of the calendar month following the                                                                                                                                                                                   or buildings are subject to a final tax of 5% of the transaction
                                                                                                                                                             and
tax assessment month. Monthly tax returns must be filed by the       Tax incentives are available to entities with capital investments                                                                                                             value).
                                                                                                                                                          ®® A tax holiday period, from a minimum of five years to a
20th day of the following month. Annual corporate tax returns        in certain approved industry sectors and those operating in
                                                                                                                                                             maximum of 15 years from the commencement of commercial
must be filed within four months of the end of the book year.        certain geographic sectors if certain conditions are satisfied.                                                                                                               Withholding tax (subject to tax treaties)
                                                                                                                                                             operations. A tax holiday period up to 20 years is possible,
                                                                     Incentives include a 30% tax investment allowance (5% per year),                                                                                                              Dividends paid to a non-resident are subject to a 20% withholding
Consolidated returns are not permitted and each company must                                                                                                 subject to the discretion of the Ministry of Finance, depending
                                                                     accelerated depreciation, the carryforward of losses up to ten                                                                                                                tax (which is considered a final tax), unless the rate is reduced
file a separate return.                                                                                                                                      on the competitiveness and strategic value of the industry.
                                                                     years, and a reduced withholding tax rate of 10% on dividends                                                                                                                 under a tax treaty. Dividends paid by a domestic corporate
                                                                     paid to non-residents. An income tax reduction of 5% may be                          A temporary tax incentive is available until 31 December 2016 for                        taxpayer to a resident company are subject to a 15% withholding
Corporate taxation                                                   available to companies listed on the Indonesian stock exchange,                      taxpayers who wish to revalue their fixed assets for tax purposes.                       tax (unless the participation exemption applies), which represents
Resident companies are taxed on their worldwide income. Non-         if certain conditions are satisfied.                                                 Taxpayers that apply for a revaluation will be subject to a reduced                      an advance payment of tax liability. A 10% final withholding tax is
resident companies are only taxed on their Indonesian-sourced
                                                                                                                                                          final income tax rate of 4% or 6% (the normal rate is 10%) on                            imposed on dividends paid to a resident individual.
income, including income attributable to a PE in the country.        A tax holiday regime is available for new domestic or foreign
                                                                                                                                                          the difference between the post-revaluation asset value and
                                                                     investment in specified business sectors (e.g. pioneer                                                                                                                        Interest paid by a domestic taxpayer to a resident generally is
As from 1 July 2013, a corporate taxpayer (other than a PE)                                                                                               the tax book value prior to revaluation, with the applicable rate
                                                                     industries), but companies that use this regime are not entitled                                                                                                              subject to a 15% withholding tax, which represents an advance
that earns or receives gross income below IDR 4.8 billion within                                                                                          depending on when the application is submitted and the income
                                                                     to the other tax incentives mentioned above. Qualifying                                                                                                                       payment of tax liability. Interest paid by a bank in Indonesia to a
a fiscal year is subject to a reduced corporate income tax of                                                                                             tax due is settled.
                                                                     manufacturing projects in high priority sectors (i.e. base metals,                                                                                                            tax resident is subject to a 20% final withholding tax.
1% of gross income. Resident corporate taxpayers with gross          oil refining/petrochemicals, machinery, renewable energy and
revenue between IDR 4.8 billion and IDR 50 billion receive a                                                                                              Advance tax ruling availability
                                                                     telecommunications equipment) are granted the following                              The Minister of Finance and the Director General of Taxation may                         A 20% withholding tax is payable on branch profits after
50% reduction in the corporate tax rate imposed on the taxable       incentives:                                                                                                                                                                   corporation tax, irrespective of whether they are remitted, unless
income for gross revenue up to IDR 4.8 billion. There is no surtax                                                                                        issue rulings in certain cases, such as the determination of a debt-
                                                                                                                                                          to-equity ratio or on the tax effects of a proposed transaction.                         they are reinvested in Indonesia.
or alternative minimum tax.                                          ®® A 10% to 100% reduction in corporate income tax liability for a
                                                                        minimum investment of IDR 1 trillion;                                                                                                                                      Certain services (including consulting, management and technical
                                                                                                                                                                                                                                                   services) attract a withholding tax of 2%. In the event the service
                                                                                                                                                                                                                                                   is performed by a non‑tax resident, withholding tax is usually
                                                                     1.
                                                                        All tax information supplied by Deloitte Touche Tohmatsu (www.deloitte.com) and                                                                                            20%.
                                                                     Deloitte Highlight, 2017.
12                                                                                  HSBC Treasury Management Profile 2018 | Indonesia            HSBC Treasury Management Profile 2018 | Indonesia                                                                                       13

                                                                                                                                                          Indonesia has no specific tax rules for
                                                                                                                                                          cash pooling arrangements. Hence, the
                                                                                                                                                          tax treatment would follow the general
                                                                                                                                                          principles of the income tax law.

Tax treaties/tax information exchange agreements (TIEAs)                 Certain disposals of land and/or buildings are subject to a final tax   Sales taxes/VAT and excise duties                                       Financial transactions/banking services tax
Indonesia has exchange of information relationships with 77              of 2.5% of the transaction value.                                       VAT is levied at a rate of 10% on the sale of taxable goods and         The sale of shares listed on the Indonesian stock exchange
jurisdictions through 71 double tax treaties and six TIEAs.                                                                                      services. Imports are subject to VAT; exports of taxable goods are      are subject to a final tax of 0.1% of the transaction value. An
                                                                         Transfers of land and the titles of buildings are taxed at 5% by the    zero rated.                                                             additional tax of 0.5% applies to the share value of founder shares
Indonesia is a signatory of the Multilateral Competent Authority         transferor on the higher of the market value or the deemed sales                                                                                at the time of a initial public offering.
Agreement on the automatic exchange of country-by-country                value, as determined by the government.                                 VAT also applies to intangible goods (including royalties) and to
financial account information. Under this multilateral agreement,                                                                                virtually all services provided outside Indonesia to Indonesian         The transfer of the shares of an unlisted resident company is
information will be exchanged between tax administrations,               Controlled foreign companies                                            businesses. In addition to VAT, some goods are subject to a luxury      subject to withholding tax of 5% of the transfer value, unless an
giving them a single, global picture on some key indicators of           The Ministry of Finance is authorised to determine when a               sales goods tax (LST) at rates of 10% to 200%.                          exemption applies under a tax treaty.
economic activity within multinational enterprises.                      dividend is deemed to be derived from a foreign company
                                                                         established in another country, where an Indonesian resident            A number of goods (such as basic necessities) and services              Payroll and social security taxes
Thin capitalisation                                                      taxpayer holds at least 50% of the paid-up capital of the foreign       (including food served in restaurants, health care, financial           There is no payroll tax payable by employers. Employers are
Starting from fiscal year 2016, a certain portion of interest arising    company or, together with other resident taxpayers, holds at            services and hotels) are exempt from VAT.                               required to withhold income tax on any payments made to
from debt is non-deductible for tax purposes, if the taxpayer’s          least 50% of the paid-up capital. This applies only if the foreign                                                                              employees.
debt-to-equity ration exceeds 4:1 (except for certain industries).       company does not trade its shares on the stock exchange. If no          The following financial services are exempted from VAT:
                                                                         dividends are declared or derived from the offshore company, the                                                                                An employer must contribute the following to Indonesia’s social
The general law authorises the Ministry of Finance to determine          resident taxpayer must calculate and report the deemed dividend         ®® Financial services that accumulate funds from the public, such       security system if it employs ten or more individuals, or maintains
the debt-to-equity ratio of companies for tax calculation purposes.      in its tax return; otherwise, the Ministry of Finance will do so.          as current accounts, time deposits, certificates of deposit,         payroll expense of at least IDR 1 million per month:
There are no thin capitalisation rules.                                                                                                             savings, and/or any other form that is equivalent to it;
                                                                         The dividend is deemed to be derived either in the fourth month         ®® Financial services that place funds, borrow funds or lend funds      ®® Workers’ accident compensation: 0.24% to 1.74%, with
Transfer pricing                                                         following the deadline for filing the tax return in the foreign            to other parties using mail, telecommunication infrastructure           the rate dependent upon the type of industry in which the
Transactions between parties that have a special relationship            country, or seven months after the offshore company’s tax year             or notes, cheques and other means;                                      employer is engaged;
must be carried out in a ‘commercially justifiable way’ and on           ends, if the country does not have a specific tax filing deadline.      ®® Financial services, including financing based on Islamic             ®® Workers’ old age compensation: 3.7%, which is supplemented
an arm’s-length basis. Documentation is required, which should                                                                                      principles, such as leasing with a right option, factoring, credit      by a 2% contribution made by the individual employee,
include an overview of the taxpayer’s business operations and            Disclosure requirements                                                    cards business, consumer finance, lending services on the               resulting in a total contribution of 5.7%;
structure, its transfer pricing policy, a comparability analysis,        A taxpayer must provide certain information regarding transfer             basis of legal liens, including liens and fiduciary sharia; and      ®® Workers’ death compensation: 0.3%; and
selected comparables and an explanation of how the arm’s-                pricing transactions with related parties in an attachment to the       ®® Underwriting and insurance services.                                 ®® Workers’ health compensation: 4%.
length price or profit was determined (including the transfer            annual tax return. The information will be maintained by the tax
pricing methodology). The Indonesian tax authorities have issued         authorities and may be tested by tax auditors in the course of a        Excise duties are levied on petrol, cigarettes and alcohol, at
detailed transfer pricing guidelines, which, in principle, are in line   tax audit.                                                              various rates.
with the OECD’s approach.
                                                                         Stamp duty                                                              Entrepreneurs exceeding a certain amount in annual sales of
Land and buildings tax                                                   Certain documents are subject to stamp duty at a nominal                taxable goods and/or taxable services are required to register for
Land and building tax is payable annually on land, buildings             amount of IDR 3,000 or IDR 6,000.                                       VAT purposes and issue a VAT invoice on the delivery of taxable
and permanent structures. The rate typically is not more than                                                                                    goods and/or taxable services.
0.3% of the sale value of the property. The land and building            Cash pooling
tax for certain businesses (i.e. oil and gas, geothermal, mining,        Indonesia has no specific tax rules for cash pooling
plantation forestry) is regulated under a specific regime.               arrangements. Hence, the tax treatment would follow the general
                                                                         principles of the income tax law.
14   HSBC Treasury Management Profile 2018 | Indonesia   HSBC Treasury Management Profile 2018 | Indonesia                                                                                        15

                                                         Banking

                                                         Overview
                                                                                                                               Major banks
                                                         There are 118 commercial banks operating in Indonesia, including
                                                         four state‑owned commercial banks, 78 domestic privately                                                       Total assets (USD billions)
                                                                                                                               Bank
                                                         owned commercial banks, 26 regional government banks and 12                                                    30 June 2017
                                                         privately owned Islamic banks. There are also ten foreign-owned
                                                                                                                               Bank Mandiri                             82,084
                                                         banks and approximately 1,643 rural credit banks1.
                                                                                                                               Bank Rakyat Indonesia                    79,002
                                                         Indonesia’s banking sector is dominated by four banks, which
                                                         control over 52% of the banking sector’s total assets. Three of       Bank Central Asia                        56,768
                                                         the banks – Bank Mandiri, Bank Rakyat Indonesia and Bank              Bank Negara Indonesia                    48,581
                                                         Negara Indonesia – are majority state owned. In 2016, Indonesia
                                                         announced plans to form a holding company that will manage its        Bank CIMB Niaga                          18,596
                                                         four state-controlled banks (including Bank Tabungan Negara).         Source: www.accuity.com, October 2017.

                                                         Islamic banking has developed rapidly in Indonesia over the past
                                                         decade. In addition to the 12 privately owned Islamic banks, there
                                                         are 22 Islamic banking units of conventional banks providing         In 2017, the Development Bank of Singapore (DBS) announced it
                                                         Islamic banking services. The Islamic banking sector accounts for    would be launching a mobile-only bank in Indonesia to promote a
                                                         approximately 5% of the banking sector’s total assets.               more digital, branchless and signature-less service in the market.

                                                         Plans to create an Islamic ‘megabank’ by merging the Shariah-        There are ten foreign-owned banks operating in Indonesia. Only
                                                         compliant units of Bank Mandiri, Bank Negara Indonesia, Bank         those foreign banks ranked as one of the world’s top 200 global
                                                         Rakyat Indonesia and Bank Tabungan Negara have been put on           banks in terms of assets are permitted to establish operations
                                                         hold; in 2017, the OJK, Indonesia’s financial regulator, said that   in the country (top 300 for foreign banks opening representative
                                                         consolidation of the banks would only be realised when there is      offices). Existing laws allow foreign banks to establish operations
                                                         certainty of the establishment of a holding company owned by         in the country by opening a branch, acquiring or merging with
                                                         State Enterprise Mlik Negara (BUMN).                                 local banks and by opening representative offices (these are
                                                                                                                              restricted from offering bank services). There are 19 joint ventures
                                                         The traditional branch network remains a strong feature              between foreign and domestic institutions.
                                                         of Indonesia’s banking landscape. However, the digital
                                                         transformation of the banking sector is underway, with increased     In March 2017, Bank Indonesia approved the merger of PT Bank
                                                         investment in electronic banking and mobile payment apps. The        Windu Kentjana (MCOR) and PT Bank Antardaerah (Bank Anda)
                                                         Indonesian government is keen to promote mobile banking as           with Bank China Construction Bank Indonesia. The merger is
                                                         a means of reaching the 65% of the population without bank           expected to be completed before the end of 2017. In May 2017,
                                                         accounts.                                                            HSBC and PT Bank Ekonomi Raharja officially merged. The
                                                                                                                              merged entity will be known as PT Bank HSBC Indonesia.

                                                                                                                              Indonesia is implementing Basel III regulations for commercial
                                                                                                                              banks. Full implementation is expected by 2019.
                                                         1.
                                                              Bank Indonesia.
16                                    HSBC Treasury Management Profile 2018 | Indonesia           HSBC Treasury Management Profile 2018 | Indonesia                                                                                        17

Payment
Instruments

     Bank Indonesia        Cash
                           Cash remains an important payment medium in Indonesia,
                           particularly for low‑value retail transactions.
                                                                                                   Payment statistics

                                                                                                                                         Millions of transactions                        Traffic (IDR billions)

     is in the process
                                                                                                                                                                         % change                                          % change
                                                                                                                                         2015             2016           2016/2015       2015            2016              2016/2015
                           Credit transfers
                           All credit transfers in Indonesia are automated.

     of developing a
                                                                                                   Cheques and bilyet giro               41.7             43.0           3.1             1,607,298.4     1,791,488.8       11.5

                           ®® High-value (equal to or above IDR 100 million) and urgent            Debit cards                           4,574.4          5,196.5        13.6            4,897.7         5,623.9           14.8

     National Payment
                              credit transfers are cleared and settled via BI‑RTGS, the
                                                                                                   Credit cards                          280.5            305.1          8.8             281,325         281,020           – 0.1
                              national RTGS system, on a same-day basis. All transactions of
                              IDR 500 million or above must be processed via the BI-RTGS.          High-value credit transfers           11.0             7.7            – 30            112,845.4       111,827.3         – 0.9

     Gateway in order to   ®® Low-value (below IDR 500 million) and high-volume credit
                              transfers are processed via the Credit Clearing element of the
                                                                                                   Low-value credit transfers            182.6            205.2          12.4            4,710.3         6,416.2           36.2
                                                                                                                                                                                                             Source: Bank Indonesia, May 2017.
                              SKNBI. Funds are available on a same-day or next working-day

     process electronic       basis. Low-value credit transfers include payroll, supplier and
                              third-party payments.

     payments, including   Credit (and debit) transfers accounted for approximately 5% of
                           the volume of all cashless payments in 2016, and 3.8% of the
                                                                                                  Card payments
                                                                                                  Payment cards, particularly debit cards, are a popular method
                                                                                                                                                                        Three domestic ATM networks (Bersama, Prima and ALTO)
                                                                                                                                                                        and two international ATM networks (Cirrus and Plus) operate

     ATM transactions,
                           volume1.                                                               of payment in Indonesia. They accounted for approximately             in Indonesia. Transactions at domestic ATMs are carried out in
                                                                                                  95% of the volume of all cashless payments in 2016 (debit             real time, with final settlement taking place through BI-RTGS.
                           Direct debits                                                          cards accounted for 90%). The value of debit card transactions        Transactions at Cirrus and Plus ATMs are cleared by MasterCard

     within the country.   There is currently no standard interbank system in Indonesia for       over the same period was negligible (0.2%), while credit cards        and Visa.
                           direct debits. A direct debit is only possible if the originator and   transactions accounted for 12.8% of the value1.
                           receiver have an account in the same bank.                                                                                                   POS transactions are carried out via two POS networks, the Debit
                                                                                                  There were approximately 142 million debit cards and 17.7             BCA network and Kartuku. All ATMs and POS terminals are EMV-
                           Cheques                                                                million credit cards in circulation at the end of April 2017. There   compliant.
                           The cheque is a popular cashless payment instrument,                   were also 8.2 million ATM cards1.
                           particularly for commercial payments. Bilyet giros, which cannot                                                                             Bank Indonesia is in the process of developing a National
                           be exchanged for cash, are also available.                             Sixty-five banks issue debit cards in Indonesia, 24 issue credit      Payment Gateway in order to process electronic payments within
                                                                                                  cards and 113 issue ATM cards. Visa, MasterCard and JCB               the country. The new system will be applied to ATM debit and
                           Cheques must be presented for payment within 70 days of their          International are the principal credit card brands issued. All        credit card transactions as well as to electronic transfers.
                           issue. Post‑dated cheques are permitted.                               cards issued are EMV-compliant.
                                                                                                                                                                        The Asian Payment Network (APN) initiative currently allows ATM
                           Cheques and bilyet giros are cleared via the Debit Clearing            There are four credit card clearing operators in Indonesia (JCB       card holders in Indonesia to perform cash withdrawals at the
                           element of the SKNBI. Final settlement is via BI-RTGS. Funds are       International, MasterCard Indonesia, Visa Worldwide Indonesia         ATMs of participating banks in each member country (Australia,
                           available to beneficiaries on a next working-day basis.                and Rintis Sejahtera) and five ATM and debit card clearing            China, Japan, Indonesia, Malaysia, New Zealand, the Philippines,
                                                                                                  operators (Artajasa Pembayaran Elektronis, Daya Network               Singapore, South Korea, Thailand and Vietnam), through a linked
                           Cheques accounted for just 0.7% of the volume of all cashless          Lestari, Rintis Sejahtera, MasterCard Indonesia and Visa              ATM network. The APN’s aim is to become a settlement network
                           payments in 2016, but 81.6%% of the value1.                            Worldwide Indonesia).
18                                                                                                  HSBC Treasury Management Profile 2018 | Indonesia   HSBC Treasury Management Profile 2018 | Indonesia   19

for a range of retail payments across Asia. In Indonesia, the
initiative is operated by PT Alto Network, PT Artajasa Pembayaran                        % volume of all
Elektronis and PT Rintis Sejahtera.                                                      cashless payments 2016

Electronic wallets
Electronic money schemes are available in the form of reloadable
pre-paid cards.                                                                              Credit Transfers     5.0%
                                                                                             Debit Cards          90.0%
There were 603.9 million electronic wallet transactions in                                   Credit Cards         5.0%
Indonesia in 2016, with a total value of IDR 7.1 trillion. This was                          Cheques              0.7%
an increase of 12.8% and 34% respectively on 2015 figures1.

Unregistered e-money cards have a maximum value threshold of
IDR 1 million. Registered e-money cards have a value threshold of
IDR 5 million. There is a monthly limit of IDR 20 million for
e-money transactions.                                                                    % value of all
                                                                                         cashless payments 2016
There are 23 institutions currently offering e-money schemes
in Indonesia. Recent measures by Indonesia’s central bank to
promote the use of electronic money include the implementation
of electronic parking transactions (e-Parking) and the launch of
                                                                                             Credit Transfers     3.8%
the Bandung Smart Card.
                                                                                             Debit Cards          0.2%
                                                                                             Credit Cards         12.8%
Mobile wallet payment schemes such as Bank Central Asia’s
                                                                                             Cheques              81.6%
Sakuku service and telecoms operators Telkomsel’s T-Cash and
Indosat Ooredoo’s Dompetku are available and increasingly
popular.                                                                                Source: Bank Indonesia.

In 2016, the transaction value of mobile wallet payments
increased 88.9% on 2015 figures, to USD 893 million2.

Other payments
Postal money orders are offered by the Indonesian post office,
Pos Indonesia, across its sizeable nationwide branch network.

1.
  Bank Indonesia.
2.
  Research and Markets: Indonesia Mobile Wallet and Payment Market Opportunities
(Databook Series) - Market Size and Forecast (2015-2021) by Mobile Commerce, P2P
transfer, Bill Payment, Retail Spend, Consumer Attitude & Behaviour, and Market Risk.
20                                       HSBC Treasury Management Profile 2018 | Indonesia    HSBC Treasury Management Profile 2018 | Indonesia                                                                                                          21

Payment
Systems

     BI-RTGS processes   Type
                         BI-RTGS, Indonesia’s national interbank real-time gross
                         settlement (RTGS) system, is operated by Bank Indonesia.
                                                                                              Clearing cycle details
                                                                                              BI-RTGS
                                                                                                                                                                     Currency centre holidays

                                                                                                                                                                     2018                         1 Jan, 16 Feb, 17*, 30 Mar, 14 Apr*,

     high-value and      ®® BI-RTGS processed 7.7 million payments in 2016, with a value
                                                                                              BI-RTGS settles transactions in real time. Settlement takes place
                                                                                              across the participant banks’ correspondent accounts held at
                                                                                                                                                                                                  1, 10, 30* May, 1, 15*, 16* Jun,
                                                                                                                                                                                                  17, 22* Aug, 12 Sep*, 21 Nov*, 25 Dec
                            of IDR 111.8 trillion, a decrease of 1% and 30% respectively on   Bank Indonesia.

     urgent interbank       2015 figures1.
                                                                                              ®® 16:30 WIB: cut-off time for third-party payments.
                                                                                                                                                                     2019                         1 Jan, 5 Feb, 7* Mar, 3*, 19 Apr,
                                                                                                                                                                                                  1, 20*, 30 May, 1, 5*, 6* Jun,
                                                                                                                                                                                                  12*, 17 Aug, 1 Sep*, 10 Nov*, 25 Dec
     credit and debit
                         The SKNBI, Indonesia’s national automated clearing system,           ®® 17:00 WIB: cut-off time for interbank transfers. The interbank
                         is operated by Bank Indonesia. The SKNBI is divided into two            transfers are processed by online computer connections with        * The date shown may vary by plus or minus one day. These dates are derived by
                         subsystems:                                                             Bank Indonesia.                                                    converting from a non-Gregorian calendar (e.g., Muslim or Hindu) to the Gregorian

     transfers. All
                                                                                                                                                                    calendar. Some of these dates cannot be determined in advance with absolute
                         ®® Credit Clearing for all low-value credit transfers; and                                                                                 accuracy, even by the governing authorities. In the case of Muslim dates in particular,
                                                                                              SKNBI Credit Clearing                                                 the feast days are determined by the sighting of a new/full moon.
                         ®® Debit Clearing for all paper-based payments including direct      Credit payments are processed in two daily clearing cycles: 06:30

     transactions of        debits and cheques.
                         ®® SKNBI processed 113.5 million transactions in 2015, with a
                                                                                              to 11:45 and 12:45 to 16:30 WIB.                                       Source: www.goodbusinessday.com.

                                                                                              ®® 16:30: cut-off time for data to be submitted to the central

     IDR 500 million
                            value of IDR 3.2 trillion, a 5.5% and 13.1% increase on 2014
                            figures respectively2.                                               clearing computer. Data is transmitted online via dedicated
                                                                                                 terminal, offline or on disc or CD.

     or above must be
                         Participants
                         All banks in Indonesia participate in BI-RTGS and SKNBI.             Final settlement takes place in participants’ accounts held at Bank
                                                                                              Indonesia via BI-RTGS. Funds are available on a same-day or next

     processed via the   Transaction types processed                                          working-day basis.
                         BI-RTGS processes high-value (equal to or above IDR 100 million)
                         and urgent IDR-denominated interbank credit and debit transfers.     SKNBI Debit Clearing

     BI-RTGS.            All transactions of IDR 500 million or above must be processed
                         via the BI-RTGS. In addition, BI-RTGS effects the final settlement
                                                                                              Debit payments are processed in one clearing cycle each day
                                                                                              between 06:30 and 17:00.
                         of participants’ net balances originating from the SKNBI.
                                                                                              Payments are processed either via an automated magnetic
                         The SKNBI processes low-value (below IDR 500 million),               image-reading system or manually. The local clearing operator
                         non-urgent and bulk electronic credit and debits and all paper-      collates all the data that is submitted to the central clearing
                         based payments.                                                      computer for national clearing.

                         Operating hours                                                      ®® 17:00 WIB: cut-off time for data to be submitted to the central
                         BI-RTGS operates from 06:30 to 19:00 WIB, Monday to Friday.             clearing computer.

                         The SKNBI operates 06:30 to 20:00 WIB, Monday to Friday.             Final settlement takes place in participants’ accounts held at Bank
                                                                                              Indonesia via BI-RTGS. Funds are available on a same or next
                                                                                              working-day basis.
                         1.
                              Bank Indonesia, Payment System statistics.
                         2.
                              Bank Indonesia, 2015 Annual Report.
22   HSBC Treasury Management Profile 2018 | Indonesia   HSBC Treasury Management Profile 2018 | Indonesia                                                                                    23

                                                         Cash
                                                         Management

                                                         Domestic                                                             ®® Certificates of deposit are offered by commercial banks, with
                                                         Notional pooling                                                        maturities ranging from one week to one year.
                                                         Notional pooling is permitted for resident companies and offered     ®® Bank Indonesia auctions Sertifikat Bank Indonesia (SBI) on a
                                                         by a number of leading international banks.                             weekly basis, with maturities of one, three, six and
                                                                                                                                 12 months. SBIs are issued in denominations of
                                                         Non-residents are not permitted to participate in cash                  IDR 1 million.
                                                         concentration structures because of the borrowing restrictions
                                                                                                                              ®® Repurchase agreements are available in INR and foreign
                                                         placed upon them.
                                                                                                                                 currency.
                                                         Cash concentration                                                   ®® Money market funds are widely available.
                                                         Cash concentration is permitted for resident companies and           ®® Banker’s acceptances are available in Indonesia but not
                                                         offered by a number of leading international banks.                     commonly used by companies.

                                                         Non-residents are not permitted to participate in cash               Custody and securities settlement1
                                                         concentration structures because of the borrowing restrictions       Depositories
                                                         placed upon them.                                                    ®® Bank Indonesia.
                                                                                                                              ®® Indonesian Central Securities Depository (KSEI).
                                                         Cross-border sweeping is permitted for resident entities.
                                                                                                                              The Indonesian Clearing and Guarantee Corporation (KPEI) is
                                                         Collections                                                          the clearing house for all securities traded on the Indonesia
                                                         Banks in Indonesia offer a range of collections options to           Stock Exchange (IDX).
                                                         corporate clients, including lockbox and regular cash and cheque
                                                         collection services.                                                 The KSEI provides central registration of securities and operates
                                                                                                                              a book-entry settlement system. Settlement takes place on a
                                                         Cross-border                                                         delivery-versus-payment (DVP) basis.
                                                         Cross-border payments are routed via SWIFT and settled through
                                                         accounts held with correspondent banks abroad or, in the case of     For government bonds and central bank instruments, Bank
                                                         international banks, via their own networks.                         Indonesia acts as central securities depository and operates
                                                                                                                              the Bank Indonesia Scripless Securities Settlement System
                                                         Lifting fees                                                         (BI-SSSS), which conforms to BIS Model 1. Settlement of these
                                                         Fees are applied on funds transfers between resident and non-        instruments is on a DVP-basis in BI-RTGS.
                                                         resident accounts.
                                                                                                                              BIS Model
                                                         Short-term investments                                               ®® Model 1.
                                                         ®® Interest can be earned on resident and non-resident current
                                                            and demand deposit accounts.                                      Settlement cycle
                                                         ®® Time deposits are available in IDR or major foreign currencies,   ®® T+3 for equities.
                                                            with maturities of one month to two years.                        ®® T+2 for income securities.

                                                                                                                              1.
                                                                                                                                   Data as at February 2017.
24                                         HSBC Treasury Management Profile 2018 | Indonesia           HSBC Treasury Management Profile 2018 | Indonesia   25

Electronic
Banking

     Six banks provide    Electronic banking is available in Indonesia and offered by the
                          majority of the country’s banks. There is no bank-independent
                          electronic banking standard; each bank offers its own proprietary

     the branchless       system for corporate banking purposes.

                          Internet and mobile banking is available in Indonesia, but

     banking service,     adoption rates are very low. Online transactions are conducted via
                          the Secure Electronic Transaction (SET) system.

     Laku Pandai. The     In 2015, the OJK launched a branchless banking service, Laku
                          Pandai. Aimed at individuals, particularly in rural areas, without

     service is aimed     access to banking facilities, the scheme encourages people to
                          manage their finances via mobile banking. Six banks currently
                          provide this service.

     at encouraging       Indonesia has an internet penetration rate of 51.8%; 47.6% of the
                          population access the internet through a smartphone1.

     people to manage
     their finances via
     mobile banking.

                          1.
                               As of October 2016, Indonesian Internet Service Provider Association.
26                                                                                              HSBC Treasury Management Profile 2018 | Indonesia           HSBC Treasury Management Profile 2018 | Indonesia                                                                                        27

Trade                                                                                                                                                               As a member of ASEAN and AFTA,
                                                                                                                                                                    Indonesia has committed to lower

Finance                                                                                                                                                             inter‑regional tariffs of 0% to 5% through
                                                                                                                                                                    the CEPT scheme. Certain goods such as
                                                                                                                                                                    sensitive agricultural products are exempt.

Key import partners                                                                   Imports                                                               Indonesia is a member of the 21-member Asia-Pacific Economic           Taxes/tariffs and other fees
                                                                                      Documents                                                             Cooperation (APEC) forum, which intends to lift all trade and         Export taxes and tariffs are applied to some products, including
                                                                                      In order to import goods into Indonesia, a customs declaration,       investment barriers in the region.                                    rattan, timber, cocoa and crude palm oil and its derivatives.
                                                                                      commercial invoice (including a full description of the imported
                                                                                      goods), bill of lading, packing list, cargo release order and, in     Preferential duties are applied to certain items in accordance with   Authorised foreign exchange banks are used to collect export
     China                    20.6%                                                                                                                         World Trade Organisation and AFTA regulations. Raw materials          taxes.
                                                                                      certain cases, certificate of origin are required.
     Singapore                12.6%                                                                                                                         and capital goods are subject to a 5% import tariff.
     Japan                    9.3%                                                    Licences                                                                                                                                    Prohibited exports
     Malaysia                 6.0%                                                    Licences are required for all imports into Indonesia. Most goods      Authorised foreign exchange banks are used to collect import          A negative list (of products that may not be exported) is in
     South Korea              5.9%                                                    are imported under open general licences. Agricultural products       taxes.                                                                operation. It is prohibited to export certain types of low-quality or
     Thailand                 5.7%                                                    such as beverages, fruits and other food items are only permitted                                                                           unprocessed rubber, scrap metal and culturally valuable antiques.
     USA                      5.3%                                                    to be imported by those designated to do so by the Ministry of        Indonesia has three free trade zones, all located in the Riau
                                                                                      Trade.                                                                Islands: the Free Trade Zone and Free Port of Batam; the Bintan       Financing imports and exports
                                                                                                                                                            Free Trade Zone; and the Free Trade Zone and Free Port of             Imports
                                                                                      Taxes/tariffs and other fees                                          Karimun.                                                              Commercial banks are generally responsible for establishing
Key export partners                                                                   Indonesia is a member of the Association of Southeast Asian                                                                                 financing requirements for imports.
                                                                                      Nations (ASEAN) and the ASEAN Free Trade Area (AFTA).                 Prohibited imports
                                                                                                                                                            A negative list (of products that may not be imported) is in          Exports
                                                                                      As a member of ASEAN and AFTA, Indonesia has committed                operation. It is prohibited to import certain commodities into        There are no financing requirements for exports.
                                                                                      to lower inter‑regional tariffs of between 0% and 5% through          Indonesia, in order to protect fauna and flora, and for national
     Japan                    12.0%                                                   the Common Effective Preferential Tariff (CEPT) scheme. Certain       security and moral reasons.
     USA                      10.8%                                                   goods such as sensitive agricultural products are exempt from
     China                    10.0%                                                   this.                                                                 It is also prohibited to import rice and most second-hand items.
     Singapore                8.0%
                                                                                      Tariffs on 99% of the products in the inclusion list of the ASEAN-6   Exports
     India                    7.8%
                                                                                      (Brunei Darussalam, Indonesia, Malaysia, the Philippines,             Documents
     South Korea              5.1%
                                                                                      Singapore and Thailand) have been reduced to no more than 5%.         In order to export goods from Indonesia, a customs declaration,
     Malaysia                 5.1%
                                                                                      More than 60% of these products have zero tariffs.                    commercial invoice, bill of lading, packing list and, in certain
                                                                                                                                                            cases, certificate of origin are required.
Source: The World Factbook. Washington, DC: Central Intelligence Agency, 2017         The ASEAN-China free trade area eliminates 90% of tariff and
(https://www.cia.gov/library/publications/resources/the-world-factbook/index.html).                                                                         Licences
                                                                                      investment barriers between China and ASEAN member states.
                                                                                                                                                            All exporters are obliged to acquire trade permits from the
                                                                                      ASEAN has established free trade agreements with Australia,           Ministry of Trade.
                                                                                      India, Japan, New Zealand and South Korea and is negotiating a
                                                                                      free trade agreement with the EU.                                     Approval from the Ministry of Trade is required in order to export
                                                                                                                                                            certain commodities produced in Indonesia. The export of some
                                                                                                                                                            of these commodities may be temporarily suspended in order to
                                                                                                                                                            ensure that domestic demand is met and to maintain domestic
                                                                                                                                                            price stability.
28                                                            HSBC Treasury Management Profile 2018 | Indonesia   HSBC Treasury Management Profile 2018 | Indonesia                                                                                                                                29

Useful
Websites

 Bank Indonesia                                        www.bi.go.id

 Leading banks:        Bank Central Asia               www.klikbca.com

                       Bank CIMB Niaga                 www.cimbniaga.com

                       Bank Mandiri                    www.bankmandiri.co.id

                       Bank Negara Indonesia           www.bni.co.id

                       Bank Rakyat Indonesia           www.bri.co.id

 Indonesian Banks Association                          www.perbanas.org

 ASEAN Bankers’ Association                            www.aseanbankers.org

 State-owned Asset Management Company                  www.ptppa.com

 Indonesian Financial Services Association             www.ifsa.or.id
                                                                                                                  Disclaimer
 Ministry of Finance                                   www.kemenkeu.go.id
                                                                                                                  This document has been produced by HSBC Bank plc and members of the HSBC Group (“HSBC”), together with their third-party contributor, WWCP Limited. We make no
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