In late December 2015, Indonesia's capital market regulator
(Otoritas Jasa Keuangan or OJK) issued several new
regulations affecting the venture capital industry in
Indonesia. Under the new regulations, a venture capital company
is required to have a minimum equity of IDR50 billion
(approximately $3.7 million). A venture capital company
licensed before this date and having less than the required
minimum equity must inject additional funds to comply with the
new rule by December 31 2020.
Under the new regulation, a venture capital company in
Indonesia is required to invest at least 15% of its operation
in share capital or convertible security of investee companies
within three years of coming into operation. The minimum ratio
between investment and assets is 40%, which must be achieved by
the third year of operation.
Investment by a venture capital company to a single investee
company is limited to 25% of the venture capital company's
equity. Share investment in an investee company must be
divested within 10 years.
The new regulation provides that divestment may be done by
way of an initial public offering (an IPO), private placement
to a new investor, or share buyback by the investee
The OJK has signaled that the new regulation may be further
amended to reflect input from the industry. Dumoly Pardede, a
high-ranking OJK officer, has expressed his willingness to be
responsive to comments from the industry. For example, Pardede
has said that he is open to reducing the minimum equity
requirement in favour of a more tiered capital commitment over
time. Pardede also responded favourably to the industry's
request that a secondary board be set up to facilitate future
The new regulation is effective as of December 21 2015.
Oene Marseille and Emir Nurmansyah