Indonesia Relaxes Foreign Ownership Rules for Insurance Companies

Legal Updates
Indonesia Relaxes Foreign Ownership Rules for Insurance Companies
1 April 2020

The Government of Indonesia (GOI) has issued Government Regulation No. 3 of 2020 (GR 3), which amends Government Regulation No. 14 of 2018 regarding Foreign Ownership in Insurance-Related Companies (GR 14).

GR 3 relaxes foreign ownership rules for insurance-related companies in Indonesia.

Foreign Ownership for Insurance Companies Under GR 14

GR 14 limits foreign ownership in an insurance company to 80%. This statutory limitation, however, is not applicable to publicly listed insurance companies.

GR 14 provides that foreign ownership is calculated by:


  • Direct participation in the insurance company.
  • Transactions on the stock exchange.
  • Participation in the local shareholder(s) of the insurance company through direct participation or through the stock exchange.

GR 14 provides that insurance companies with more than 80% foreign ownership at the time GR 14 was issued:


  • Are exempted from the foreign ownership limitation as stipulated in GR 14.
  • Are not allowed to increase their foreign ownership percentage.

If insurance companies with a foreign shareholding above the 80% limitation as discussed above increase their issued and paid-up capital, this capital increase must meet one of the following requirements:


  • At least 20% subscribed by Indonesian individuals and/or Indonesian business entities.
  • At least 20% is offered through public offering.

New Rules Under GR 3

With the issuance of GR 3, the Government has relaxed the foreign ownership cap for insurance-related companies. Previously, under GR 14, foreign shareholder(s) could subscribe newly issued shares only up to 80%, since 20% was statutorily allocated to Indonesian individuals and/or Indonesian business entities and/or offered through public offering.

Thus, a foreign shareholder in an insurance company that had its share ownership of more than 80% grandfathered under GR 14 would experience a decrease in ownership if the company increased its capital.

GR 3 allows a foreign shareholder to maintain its shareholding percentage if the shareholder already owns more than 80% of shares. The remaining unsubscribed shares must be subscribed by Indonesian individuals and/or Indonesian business entities. If no Indonesian individuals and/or Indonesian business entities subscribe the newly issued shares, the capital increase shall be conducted through the initial public offering process.

Thus, a foreign shareholder with more than 80% ownership in an insurance-related company will not experience an erosion of their ownership percentage if the company increases its capital.

Insurance companies that fail to comply with the provisions of GR 3 are subject to sanctions in the form of:


  1. written warning;
  2. limitation of business activity, either partially or wholly;
  3. revocation of business license; and/or
  4. administrative fine.


This publication is intended for informational purposes only and does not constitute legal advice. Any reliance on the material contained herein is at the user's own risk. You should contact a lawyer in your jurisdiction if you require legal advice. All SSEK publications are copyrighted and may not be reproduced without the express written consent of SSEK.

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Ira Andamara Eddymurthy
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