The foreign ownership cap involves those companies that operate as card providers or offer switching, clearing or settlement services for electronic payments. The new cap only applies to (1) new companies in the electronic payment services sector, (2) existing companies that expand into this sector, and (3) those existing companies (in this sector) that change ownership. Deputy Governor Ronald Waas informed the new regulation does not work retroactively as this would be a shock to existing foreign investment in this sector.

Indonesia's e-commerce industry is expected to grow rapidly in the years ahead and therefore Bank Indonesia set new rules to ensure that all firms maintain "the principles of prudence and adequate risk management" in accordance with national interests and consumer protection.

Google Inc. and Temasek Holdings Pte recently released joint research that shows Southeast Asia's digital economy (which includes a variety of segments including e-commerce, online games, and online advertising) will rise to USD $200 billion by 2025. Indonesia's digital market is forecast to account for 40.5 percent - or USD $81 billion - of this total market in the region. With an estimated USD $46 billion, Indonesia's e-commerce sector will contribute most to the total.

Matters that contribute to Indonesia's rapidly expanding e-commerce industry are (1) demographic composition, (2) rapidly rising mobile phone as well as smartphone penetration, and (3) rising Internet penetration.

Indonesia contains a young population with about half of the total population below the age of 30. For these younger generations of Indonesians it is easier to absorb an online lifestyle compared to the older generations. Moreover, with nearly 100 million smartphones in use in Indonesia while Internet penetration is reaching the level of 50 percent of the population, the younger generations obtain the tools to become online customers.

Through Presidential Decree No. 44/2016 on the Negative Investment List foreign investors are allowed to own a full 100 percent stake in e-commerce firms in Indonesia. The Indonesia Investment Coordinating Board (BKPM) informed that a 100 percent foreign stake will be allowed for those foreign investors who invest at least IDR 100 billion (approx. USD $7.4 million) for the establishment of an e-commerce firm in Indonesia. Pratito Soeharyo, BKPM's Director for Business Empowerment, added that an e-commerce business can also be fully-owned by a foreign investor in case the investment is below the IDR 100 billion level provided the number of new employment positions (for local workers) exceeds 1,000. Generally, however, foreign investment in Indonesia's e-commerce industry below the IDR 100 billion level will be limited to a maximum 49 percent stake.

Meanwhile, Bank Indonesia launched its new financial technology (fintech) office on Monday (14/11) in an effort to support the growing number of technology-based financial services in Indonesia. This office will have four main duties: (1) facilitating discourse and ideas, (2) providing local fintech companies the latest economic data, (3) assessing the potential, benefits and risks of fintech services in Indonesia, and (4) providing a one-stop service for those firms in need of detailed information on government policies.

Fintech transactions in Indonesia stood at a total value of USD $14.5 billion in the January - September 2016 period, accounting only 0.6 percent to the total value of fintech transactions around the globe.