Indonesian regulators are preparing to revise foreign investment caps for the nation’s $50 billion mutual fund industry, a move that could soon allow local funds to allocate more than half of their capital to overseas markets.
Speaking at a Bloomberg forum in Jakarta on Tuesday, Aliyahdin Saugi, president-director of Allianz Global Investors Asset Management Indonesia, disclosed that the Financial Services Authority (FSA) has approved an industry proposal, setting the stage for new regulations. The FSA’s next step will be drafting the revised rules, a process expected to unfold next year.
At present, Indonesian mutual funds can hold up to 15% of their net asset value in offshore assets—a structure that restricts funds from capturing broader diversification and the efficiencies of larger, cross-border trades. Overseas trading costs remain a key obstacle, Saugi noted at the event.
According to Genta Wira Anjalu, chief investment officer of Sinarmas Asset Management and vice-chairman of the Indonesian Investment Managers Association, the association—which spearheaded the proposal—has recommended new foreign asset limits of 51% or more for direct equity funds and 80% or higher for other fund types, though the final figures have yet to be determined.
Indonesia’s existing framework on fund investment draws back to the aftermath of the Asian financial crisis of the late 1990s, when rapid capital outflows triggered steep currency devaluations and long-standing wariness about unfettered investment movements.
Nonetheless, the industry association argues that fresh concerns over capital flight can be moderated, as expanded investment opportunities might actually incentivize investors to keep their assets within domestic mutual funds.
Irwanti Muljono, chief investment officer at Schroder Investment Management Indonesia, stated at the forum that the proposed changes could benefit regulatory oversight. She explained that because the funds would remain within Indonesia’s financial ecosystem, rather than flowing out of the country, regulators would be better able to monitor and manage these assets.
According to association data, Indonesia’s asset management industry oversaw a total of IDR 838 trillion as of June 2025.
