Kuta, Bali. Airwallex, an Australia startup that specializes in cross-border transactions, is keen to expand to Indonesia, as soon as it can find a way to overcome the biggest obstacle to financial technology investment in the country: the 20-percent foreign-ownership cap.
"We see Indonesia as the most exciting market in the world for fintech at the moment. Indonesia has nearly 260 million people and incredible economic growth potential in the coming years," Joe McGuire, Airwallex global head of sales and partnership, told the Jakarta Globe in a telephonic interview on Thursday (09/03).
Airwallex started out in 2015 by helping Australians make purchases in China at lower foreign exchange rates compared with banks or wire transfer services. McGuire said Airwallex's business currently depends mainly on trade with China.
The growing trade between Indonesia and China seems to be a good fit for the company. Total trade between the two countries amounted to $45.8 billion last year, up 7.8 percent from the previous year, according to data from the Indonesian Ministry of Trade.
"But before we can open an operation in Indonesia, we need to better review rules and regulations about a foreign entity establishing a business," McGuire said.
Bank Indonesia imposes a 20-percent limit on foreign ownership in electronic payment system companies to protect consumers and the national interest. The policy has its roots in the major financial crisis of the late 1990s, which saw most major Indonesian banks taken over by foreign entities.
In contrast, foreigners are allowed to have complete control of fintech companies in Australia.
Still, McGuire said the Indonesian regulator is very accommodative about fintech development and to Airwallex's business model in particular.
He said Airwallex will receive major funding from an undisclosed venture capital firm in the next couple of weeks, and that some of those funds will be used to expand the company's operations. As part of this expansion, it is weighing its options to open a business in Indonesia within the next six to 12 months.
"We are exploring options to partner with Indonesian firms and we currently have a contingent of staff from Indonesia in Melbourne," McGuire said.
Airwallex secured $5 million in a seed round between December 2015 and January 2016, backed by venture capital firm Gobi Partners and a group of angel investors.
The company currently has 400 customers – mostly exporters and importers from Australia and China. Airwallex is aiming for more than $2 billion in transactions this year, McGuire said. He declined to disclose the total value of last year's transactions.