Indonesia's Financial Services Authority has embarked on a policy of curtailing foreign ownership of Indonesian insurance companies.

Indonesia's Financial Services Authority has embarked on a policy of curtailing foreign ownership of Indonesian insurance companies, the Jakarta Post has reported.

At present the sky seems to be the limit for foreign investment, although not at the inception of a company. Section 6(4) of Government Regulation No 39/2008, which amends Regulation no 73/1992 "concerning insurance business conduct," states that "at the time of the company's establishment, foreign ownership by way of direct participation in an insurance company shall not exceed 80%." There is a restriction, however, in Article 10A: "Basically, the capital that is paid up by the Indonesian partner in an insurance or reinsurance company in which a foreign partner takes part may not decrease. However, the percentage of
shareholding of the Indonesian partner may decrease in case the company needs additional capital, which makes the Indonesian partner unable to retain its percentage of shareholding. This provision that allows foreign shareholding to exceed 80% only applies to an insurance or reinsurance company where the foreign partner has already placed direct participation of 80%."

A bill has yet to be drafted. Indonesian CEOs are hoping that the new initiative will not conflict with the goal of the ASEAN Economic Community, i.e. "investment sans limitations," as one put it to the papers.