Indonesian Investors: USA Investment Guide
Navigate capital controls and invest legally in US markets
Investment Overview for Indonesian Nationals
Dividend Withholding
Interest Withholding
FX Reporting
E-2 Treaty
Key Considerations for Indonesian Investors
Indonesia has foreign exchange regulations that require reporting of overseas investments. While not as restrictive as some countries, proper compliance is essential:
What You Can Do
- Invest in US stocks legally
- Purchase US real estate
- Open US brokerage accounts
- Transfer IDR to USD
Compliance Requirements
- Report overseas assets to BI
- Report in annual tax return
- Source of funds documentation
- Repatriation of export proceeds
Challenges
- No E-2 visa treaty with USA
- Limited broker options
- High domestic interest rates
- IDR volatility
Indonesian Capital Controls
Understanding Indonesia's FX Framework
Indonesia's capital controls are primarily reporting-based rather than restrictive. Bank Indonesia (BI) requires disclosure but generally permits overseas investment:
| Transaction Type | Limit | Requirement |
|---|---|---|
| Outward investment | No limit | BI reporting required |
| Personal remittance | No limit | Bank documentation |
| Foreign currency account | Permitted | Must be with Indonesian bank |
| Carry cash out | IDR 100M / $10K equivalent | Customs declaration above |
| Export proceeds | Must repatriate | DHE (export proceed) rules |
DHE Export Proceeds Rules
The DHE (Devisa Hasil Ekspor) rules require exporters to repatriate foreign exchange proceeds:
Key Requirements
- Export proceeds must be deposited in Indonesian bank
- Hold in special DHE account for 3 months
- Applies to natural resource exports
- Penalties for non-compliance
Exemptions
- Personal funds (not export proceeds)
- Investment returns
- Salary/employment income
- Inheritance
Foreign Exchange Regulations
Bank Indonesia Reporting
Overseas asset reporting requirements:
Foreign Asset Survey (FAS)
- Annual survey for significant holdings
- Report overseas securities
- Report foreign real estate
- Report foreign bank accounts
Thresholds
- Generally $1M+ overseas assets
- Certain business categories
- Selected by BI for survey
- Cooperation recommended
Legal Fund Transfer Methods
Compliant ways to move funds from Indonesia to USA:
| Method | Process | Documentation |
|---|---|---|
| Bank wire (TT) | Through Indonesian bank | Purpose, destination, source of funds |
| Online remittance | Wise, Remitly (if available) | Bank-linked verification |
| Broker transfer | To US brokerage directly | Investment purpose documentation |
| USD account transfer | From Indonesian USD account | Standard bank documentation |
US-Indonesia Tax Treaty
Withholding Rate Benefits
| Income Type | Standard Rate | Treaty Rate (Indonesia) | Savings |
|---|---|---|---|
| Dividends (portfolio) | 30% | 15% | 15% |
| Dividends (10%+ ownership) | 30% | 10% | 20% |
| Interest | 30% | 10% | 20% |
| Royalties | 30% | 10% | 20% |
| Capital gains (stocks) | 0% | 0% | N/A |
To claim treaty benefits, file W-8BEN with your US broker.
Indonesian Tax on US Income
Indonesian residents are taxed on worldwide income:
| Income Type | Indonesian Tax Rate | Foreign Tax Credit |
|---|---|---|
| US Dividends | Progressive rates (up to 35%) | Credit for US withholding |
| US Capital Gains | Progressive rates | N/A (not taxed in US) |
| US Interest | Progressive rates | Credit for US withholding |
| US Real Estate Income | Progressive rates | Credit for US tax |
Indonesian Reporting Obligations
Annual Tax Return (SPT)
What to Report
- Overseas securities holdings
- Foreign bank accounts
- Foreign real estate
- Income from all foreign sources
How to Report
- List in asset declaration section
- Include in income section
- Claim foreign tax credits
- File by March 31 (individuals)
Tax Amnesty History
Indonesia has conducted tax amnesty programs (2016-2017, 2022) allowing declaration of previously unreported overseas assets:
Key Points
- Amnesty programs may recur
- Lower penalty rates during amnesty
- Full disclosure recommended now
- DJP (tax authority) receives CRS data
CRS Impact
- Indonesia participates in CRS
- US shares account info with Indonesia
- Undeclared accounts may be detected
- Voluntary disclosure advisable
US Stock Investment
Investment Options
Direct US Investment
- Individual US stocks
- US-listed ETFs (SPY, QQQ, VOO)
- ADRs of global companies
- REITs
Via Indonesian Brokers
- Indo Premier (US access)
- Limited US stock selection
- Higher fees
- IDR settlement
Currency Considerations
IDR/USD exchange rate significantly impacts returns:
| Factor | Consideration |
|---|---|
| IDR depreciation | USD investments benefit from weak IDR |
| Interest rate differential | Indonesian rates much higher than US |
| Inflation hedge | USD provides some inflation protection |
| Repatriation | Future rate unknown when converting back |
US Real Estate Investment
Purchasing US Property
Indonesian citizens can purchase US real estate without restrictions:
Process
- Find property, make offer
- Wire funds from Indonesian bank
- Close with US title company
- Report to Indonesian tax authority
Documentation Needed
- Source of funds proof
- Indonesian passport
- ITIN (obtain during process)
- Purchase contract for bank
FIRPTA Considerations
When selling US real estate, Indonesian investors face FIRPTA:
| Scenario | Withholding | Notes |
|---|---|---|
| Standard sale | 15% of gross price | Withheld by buyer |
| Buyer residence, under $300K | 0% | Exemption applies |
| Buyer residence, $300K-$1M | 10% | Reduced rate |
| Withholding certificate | Varies | Apply to IRS for reduction |
Brokers and Banking
US Brokers Accepting Indonesian Residents
| Broker | Indonesia Residents | Notes |
|---|---|---|
| Interactive Brokers | Yes | Best option, low fees |
| Charles Schwab International | Yes | Good for banking too |
| Firstrade | Yes | Commission-free trades |
| TD Ameritrade | Check status | Merging with Schwab |
Indonesian Brokers with US Access
Options
- Indo Premier Securities
- Limited US stock selection
- Higher commissions
- IDR settlement convenience
Considerations
- Easier tax reporting integration
- Indonesian customer service
- Limited product range
- US direct is better for serious investors
Fund Transfer to US Broker
Transfer Methods
- Bank wire from Indonesian bank
- State purpose as "investment"
- Provide broker account details
- Keep bank receipts
Costs
- Wire fee: $20-50
- FX spread: 0.5-1%
- Correspondent bank fees possible
- Compare rates across banks
Frequently Asked Questions
Is it legal to invest overseas from Indonesia?
Yes, Indonesian residents can legally invest overseas. There are no prohibitions on foreign investment. However, you must report overseas assets in your annual tax return and comply with Bank Indonesia reporting requirements for larger holdings.
How much can I transfer abroad?
There is no hard limit on personal investment transfers. You need to provide documentation to your bank explaining the purpose (investment) and source of funds. The bank will report large transactions to Bank Indonesia as required. DHE rules only apply to export proceeds, not personal funds.
What if I have unreported overseas assets?
Given Indonesia's participation in CRS (automatic exchange of financial information), unreported overseas accounts may be detected by DJP. Voluntary disclosure is advisable. Consult an Indonesian tax advisor about options - there may be penalty reduction programs available. Don't wait to be discovered.
Can I get a US visa through investment?
Indonesia does not have an E-2 treaty with the USA, so the E-2 investor visa is not available. Options include: EB-5 investor green card ($800K-$1.05M investment), B-1 business visitor for short trips, or visa through employment (H-1B, L-1). Real estate investment alone does not provide visa benefits.
Which US broker is best for Indonesians?
Interactive Brokers is generally the best option for Indonesian investors. It accepts Indonesian residents, has low fees, offers full US market access, and provides good forex rates for IDR/USD conversion. Charles Schwab International is also good, especially if you want integrated banking.