[JAKARTA] Indonesian regulators are planning to raise foreign investment limits for the country’s US$50 billion mutual fund sector, potentially allowing local funds to allocate more than half their cash to overseas markets.
Aliyahdin Saugi, president-director of Allianz Global Investors Asset Management Indonesia, said in a Bloomberg forum in Jakarta on Tuesday (Oct 14) evening, that the Financial Services Authority (FSA) has approved a proposal filed by a local industry group.
The FSA said its next step would be drawing up new regulations for the sector, and that this may happen next year.
Mutual funds in Indonesia are currently limited to holding no more than 15 per cent of their net asset value overseas. That reduces the ability of the funds to get diverse exposure offshore while also enjoying economies of scale from large trades. The costs of overseas trading are a major deterrent for some funds, Saugi said.
The FSA did not immediately respond to a request for comment.
Genta Wira Anjalu, chief investment officer at Sinarmas Asset Management and the Indonesian Investment Managers Association’s vice-chairman, said that the association, which proposed the change, recommended new foreign asset limits of 51 per cent or more for direct equity funds and 80 per cent or higher for other mutual funds.
It is not clear what the final limits will be.
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Indonesia’s current regulatory system was built in the aftermath of the Asian financial crisis in the late 1990s, when an exodus of foreign investors battered currencies across the region and fuelled a deep anxiety about unfettered investment flows.
But the industry body expressed confidence that concerns about capital flight could be minimised. It argued that more outflows from mutual funds may be offset by their own clients keeping money inside the country, since local firms could now offer a more diverse investment package.
“Even for the regulator, it’s better for their oversight because the money stays within Indonesia, within their ecosystem,” said Irwanti Muljono, chief investment officer at Schroder Investment Management Indonesia, at the forum. “It’s not flying out elsewhere so they can monitor and control the money better.”
The industry’s total asset under management stood at 838 trillion rupiah (S$65.8 billion) as at June 2025, according to the association’s data. BLOOMBERG
