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Payment behavior in Indonesia (December 2019)

Payment transactions

In Indonesia, memories of the 1997/98 Asian crisis are still alive. Back then, when the rupiah lost up to 80 percent of its value against the US dollar, the domestic banking system, which had systematically violated the rules of financial supervision, collapsed under its dollar loans. The country slipped into insolvency.

But the lessons of that event seem to have been learned. Today the supervision works, and observers say the Indonesian banking system is stable and has sufficient liquidity. Offshore loans must be secured and registered with the banking regulator. The major international credit institutions are represented on site. German industry representatives operate export finance and offer other services.

German export transactions to Indonesia can be financed by so-called buyer credits. A minimum deposit of 15 percent is required by the Indonesian customer. The remaining 85 percent of the contract value can be granted by banks as a loan. The length of the repayment period depends, among other things, on the amount of the loan, but is usually between five and ten years.

Currency risks are to be considered in Indonesia. The rupiah temporarily lost up to 15 percent of its value against the US dollar in 2018 (but has since stabilized again). Although most international trade in Indonesia continues to be conducted in US dollars, the euro is very popular as a credit currency due to its low reference interest rate. A company that only earns rupees does not belong to the export financiers' core clientele.

You can find provisions in foreign exchange law and payment transactions in our publication "Recht Kompakt - Indonesia", available at:

Payment behavior and credit check

Much of the export business is carried out via the large Indonesian family conglomerates. For those in need of funding, the lender should be aware that often there are only one or two people who actually make decisions. The direct interlocutor, on the other hand, may not be authorized to make decisions himself.

Personal contact with Indonesian customers is also important in the banking industry. It is not uncommon for the institutes to have to wait for contractually agreed payments. Persistent follow-up is part of business. In addition, good knowledge of the scene is important in order to know which company is not a reliable business partner, reports Landesbank Baden-W├╝rttemberg (LBBW), which has had its own representative office in Jakarta since September 2019.

The standard check of a potential borrower includes auditor-audited, English-language balance sheets for the last few years and a projection for the following years. Financing from foreign banks is in great demand for Indonesian companies. Because, in addition to the attractive conditions and comparatively long repayment periods, they are a seal of quality.

With regard to credit information about potential business partners, banks primarily rely on their own research. But there are also some research offices or credit bureaus in Indonesia that can create paid analyzes and company profiles.

Local credit bureaus

Protection against payment defaults

Export credit guarantees from Euler Hermes Aktiengesellschaft (as a mandate from the German Confederation) protect the financing banks against 95 percent of political and economic risks. However, the Indonesian borrowers also often know this. And so it may well happen that they feel less obliged to service the loans in good time. The liability of a third party then lowers the awareness of wrongdoing.

If it ultimately goes to court, foreign companies on the ground cannot be sure that they will get their rights. The Indonesian judiciary is not considered independent and tends to favor the Indonesian side. The rule of thumb is to avoid legal disputes as much as possible. In this respect, the thorough examination of a business partner remains the top priority.

Export Credit Guarantees

Export credit guarantees protect companies and banks from politically and economically induced payment defaults.

Euler Hermes Aktiengesellschaft is entrusted with the management of the state export credit guarantees. It acts as a service provider for the federal government. Hermes cover comes into play where the private sector does not provide a corresponding or adequate cover offer.

Information on coverage practice for over 200 countries can be found at

Federal export credit guarantees:

Euler Hermes Kreditversicherungs-AG / Export Credit Guarantees Department

[email protected]

Private export credit insurers:

Information and important providers can be found at

Export finance

Commercial banks and special financial institutions offer various financing options for foreign transactions. Important German lenders in the export business are the Export Credit Society (AKA) and the KfW banking group.

Lender in export business

Further information on the economic situation, industries, business practice, law, customs, tenders and development projects in Indonesia can be found at The page offers an overview of various topics in Asia-Pacific.