Policy and Regulatory Framework for Remittance - Indonesia

This report provides an overview of the policy and regulatory framework for remittances in Indonesia. Although remittances contribute only 0.7% to the Indonesian GDP, its volume makes it significant to government and policy makers. The regulatory environment for remittances in Indonesia is fairly restrictive and exhibits the following characteristics:

• Limitations on foreign exchange handling, international transfers and commercial banks;
• Governments conservative approach in managing the financial system primarily due to concerns about monetary stability;
• Cost of transfer is mainly related to institutions in sending countries, with the sender incurring much of the fees;
• Banks, NBFIs and Non Financial Companies have to report their international transactions and foreign exchange handling.

Finally, the government has introduced facilitatory policies and programs for migration and remittances, particularly in rural areas. It also has a policy to empower the micro, small and medium enterprise sector as part of a strategy to increase investment options for migrants.