A Guide to Indonesia's New Financial Sector Law (P2SK): What Expats Need to Know
P2SK Law and Finance for Expats in Indonesia: How to Leverage New Opportunities
In 2023, Indonesia enacted a sweeping Financial Sector Development and Strengthening Law — P2SK (Penguatan dan Pengembangan Sektor Keuangan). This legislation marks a major step forward in modernizing the country’s financial system and is particularly relevant for expats, investors, and foreign entrepreneurs.
What exactly is changing, what new opportunities are opening for foreigners, and how could the new rules impact your investments or business in Indonesia? We explore the details, with a focus on practical advantages.
What Is the P2SK Law?
The P2SK Law (UU No. 4 Tahun 2023), signed in January 2023, aims to reform and strengthen the country’s financial sector. It’s grounded in the principles of transparency, resilience, and adaptation to the global digital economy.
You can access the full text of the law on the official government portal: OJK.go.id — the website of Otoritas Jasa Keuangan, Indonesia’s primary financial services regulator.
Main Objectives of the Law
- Establish a modern legal framework for fintech and digital assets.
- Simplify access to investment and banking products.
- Expand regulatory authority to mitigate risks and combat financial fraud and pyramid schemes.
Key Changes for Expats: Shifting Financial Landscape
1. Trusts Are Now Legally Permitted
Before 2023, Indonesia did not legally recognize commercial trusts. The P2SK Law closes that gap — now an official Commercial Trust structure, regulated by OJK, is available.
What This Means for Expats:
- A new way to structure ownership of property or assets in Indonesia via trust management.
- Estate planning without the need to register property directly under an individual’s name.
- Capital protection in the event of legal, asset, or tax exposure.
Important: Foreigners cannot establish a trust independently — it must be done through a licensed intermediary (trustee) registered in Indonesia. These intermediaries are now undergoing certification by OJK as this market begins to develop.
📌 Real-Life Example:
A French investor who owns a villa in Ubud structured ownership through a trust, enabling inheritance planning for his children — without needing to register the property under a foreign legal entity.
2. Broader Supervision of Fintech and Digital Assets
OJK’s oversight now extends beyond banks to include:
- payment systems and P2P lending platforms,
- crowdfunding and investment platforms,
- companies in blockchain, digital tokens, and virtual assets.
This boosts investor protection from financial misconduct and creates a more transparent environment for expats interested in using local digital services.
What Foreigners Are Allowed To Do:
- Use licensed blockchain investment and crowdfunding platforms.
- Open investment accounts with digital banks and participate in tokenized projects.
Current Restrictions: Managing digital assets on behalf of an expat requires involvement from a local resident consultant or legal intermediary.
3. Stronger Role for Government Regulators
OJK now plays the leading regulatory role across all non-bank and emerging financial services — including monitoring of crypto services and digital investment platforms.
Benefits for Foreigners:
- Regulatory compliance of companies is strictly verified.
- Online directories of licensed service providers are available.
- Mandatory risk disclosures on all registered platforms.
4. Deposit Insurance Enhanced
The law also introduces changes to the operations of Lembaga Penjamin Simpanan (LPS), Indonesia’s deposit insurance agency. Key updates:
- Deposit guarantee of up to IDR 2 billion (approx. $125,000) per customer per bank.
- Streamlined procedures for bank resolution and rescue in case of insolvency.
This offers greater confidence for expats in safeguarding banking assets, especially when placing large deposits or investing in term-based products in Indonesia.
How Expats Can Set Up a Trust in Indonesia
To create a trust as a foreign individual, the following steps are typically required:
- Select a certified trust manager (the official list is published on OJK’s website).
- Draw up a trust deed specifying assets, objectives, and beneficiaries.
- Register the trust and handle taxation at the trust level — legal consultation is highly recommended for accurate structuring.
Note: Offshore (foreign) assets may also be included in the trust with regulatory approval — this is useful for those looking to consolidate international and Indonesian holdings under one management structure.
Financial Awareness & Next Steps: Tips for Expats
To capitalize on the new environment and avoid missed opportunities, we recommend expats take these actions:
- Consult a financial advisor or legal expert familiar with Indonesian laws and non-resident practices.
- Verify platform and intermediary licenses via the official OJK website, especially when using trust, investment, or fintech services.
- Use registered platforms for crowdfunding or digital investment to access the local market safely.
- If you plan a long-term stay or intend to purchase property, consider trust structures to optimize asset management and taxation.
Conclusion: Indonesia Moves Toward an Open and Regulated Market
The P2SK law is more than just bureaucratic reform — it represents a genuine step toward creating a transparent and accessible financial ecosystem for all, including expats.
Whether it’s through a trust, a new form of digital deposit, or an investment in crowdfunding, foreigners now enjoy significantly more legal and financial tools in the Indonesian market.
Against the backdrop of a booming economy and rapid fintech development, now is a strategic moment to plan accordingly. Indonesia is quickly moving toward an inclusive and secure financial future — and it’s a great time to be involved.
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