Regulation Watch · Business Licensing · Indonesia, including foreign-investment and foreign-loan funding hedged through eligible Indonesian banks for PT PMA companies and projects in Bali.
Bank Indonesia Opens Incentivized Hedging for FDI and Foreign Loans
Bank Indonesia PADG 28/2026 lets eligible banks place back-to-back hedging with BI for customer foreign loans and foreign direct investment, with published premium incentives and underlying-document conditions.
- Published
- Established and published by Bank Indonesia on 8 September 2026. The PADG and official FAQ do not identify a separate gazette promulgation date.
- Effective
- 8 September 2026. The incentive may cover qualifying foreign-loan or foreign-direct-investment underlying transactions carried out since 1 July 2026.
- Added to Watch
- 28 September 2026
Who is affected
Foreign investors, PT PMA companies and project sponsors bringing equity or foreign-loan funding into Indonesia; shareholders and lenders; directors, finance and treasury teams; and Indonesian banks participating in Bank Indonesia foreign-exchange monetary operations.
Practical impact
A PT PMA or foreign investor can ask an eligible Indonesian bank to structure a customer hedge that the bank places back-to-back with Bank Indonesia. Qualifying conventional swap-buy hedges now include foreign funding supported by portfolio investment, foreign debt or foreign direct investment. The BI facility is not accessed directly by the investor: the participating bank must meet BI eligibility conditions and submit a matching bank-to-BI transaction. BI's current monetary-operations page lists USD, CNY and CNH against rupiah, tenors of one, three, six and 12 months, and September 2026 premium reductions of 15% for three months, 20% for six months and 25% for 12 months. Final underlying documents are required, and BI may change availability, schedules and incentives through technical guidance or its website.
Late discovery: Bank Indonesia established and published PADG 28/2026 on 8 September 2026, and the instrument took effect the same day. It is the fifth amendment to PADG 21/2025 on foreign-exchange monetary operations and expands the underlying transactions that can support hedging placed with Bank Indonesia.
The principal PT PMA change is the conventional swap-buy hedge for foreign funding. Eligible underlying transactions now include portfolio investment, foreign debt and foreign direct investment. For the incentive specifically, BI states that the underlying may be a foreign loan or FDI transaction carried out since 1 July 2026.
The investor or PT PMA does not transact with BI directly. An eligible monetary-operations participant executes a customer hedge and then places the corresponding transaction with BI on a back-to-back basis. The bank must have at least composite health rating 3, must not be under a relevant participation suspension or restriction, and must satisfy the contract, underlying-information and other technical requirements.
BI's current monetary-operations page lists USD, CNY and CNH against rupiah for this product, with one-, three-, six- and 12-month tenors. Following the September 2026 Board of Governors meeting, the page lists premium reductions of 15% for three months, 20% for six months and 25% for 12 months. These are operational terms rather than fixed statutory entitlements, so the executing bank should confirm the current schedule and price before the customer commits.
The underlying documentation must be final and comply with the technical guidance. FDI may be denominated in rupiah or foreign currency; where the underlying is in rupiah, the prescribed T-1 reference rate is used to convert its value into the hedge notional. Finance teams should align executed investment or loan documents, remittance evidence, corporate approvals, funding records and the bank's hedge confirmation before the transaction window.
PADG 28/2026 also broadens BI swap-sell hedges for international trade and DNDF hedges for portfolio investment and international trade. Those products may assist foreign investors, importers and exporters, but each uses its own currencies, tenors, participant conditions and underlying documents. This article focuses on the new FDI and foreign-loan route most directly relevant to PT PMA funding.
Required action
- Identify foreign-loan, shareholder-funding and foreign-direct-investment cash flows that create a rupiah exchange-rate exposure, and record the funding date, currency, amount, purpose and intended hedge tenor.
- Ask the relationship bank whether it is an eligible participant in BI foreign-exchange monetary operations and whether it can execute the required customer-to-bank and bank-to-BI transactions on a back-to-back basis.
- Prepare final underlying documents before the hedge request, including the executed loan or investment documents, funding and ownership evidence, remittance records, corporate approvals and any BI, tax, investment or debt-reporting records relevant to the transaction.
- Ensure the hedge notional, currency and tenor are consistent with the documented exposure; where an FDI underlying is denominated in rupiah, confirm the prescribed T-1 reference-rate conversion with the bank.
- Obtain the bank's written pricing, premium incentive, transaction window, rollover and early-termination terms because BI may adjust execution and incentives through technical guidance, published schedules or other official media.
- Coordinate the hedge with LKPM, foreign-debt, tax, accounting and transfer-pricing records so the funding, underlying transaction and derivative treatment remain internally consistent.