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Indonesia

Head of State  : President Joko Widodo

Capital             : Jakarta

Language(s)    : Indonesian

Currency         : Rupiah

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Profile of the Country

Information of The Country
The Republic of Indonesia, is a country in Southeast Asia, between the Indian and Pacific oceans. It is the world's largest , with more than seventeen thousand islands and at 1.904.569 square kilometres (735.358 square miles), the 14th largest by land area and the 7th largest in combined sea and land area. With over 261 million people, it is the world's 4th most populous country as well as the most populous Muslim-majority country. Java, the world's most populous island, contains more than half of the country's population.

The sovereign state is a presidential, constitutional republic with an elected parliament. It has 34 provinces, of which five have special status. Jakarta, the country's capital, is the second most populous urban area in the world. The country shares land borders with Papua New Guinea, East Timor, and the eastern part of Malaysia. Other neighbouring countries include Singapore, Vietnam, Philippines, Australia, Palau, and India's Andaman and Nicobar Islands. Despite its large population and densely populated regions, Indonesia has vast areas of wilderness that support a high level of biodiversity. The country has abundant natural resources like   natural gas, tin, . Agriculture mainly produces rice, palm oil, tea, coffee, cacao, medicinal plants, . Indonesia's major trading partners are China, United States, Japan, Singapore, and India.

History of the Indonesian archipelago has been influenced by foreign powers drawn to its natural resources. It has been an important region for trade since at least the 7th century when and then later Majapahit traded with entities from mainland China and the Indian subcontinent. Local rulers gradually absorbed foreign cultural, religious and political models from the early centuries and   kingdoms flourished. Muslim traders and Sufi scholars brought Islam, while European powers brought  one another to monopolise trade in the Spice Islands of Maluku during the Age of Discovery. Although sometimes interrupted by the Portuguese, French and British, the Dutch were the foremost European power for much of its 350-year presence in the archipelago. In early 20th century, the concept of "Indonesia" as a nation state emerged, and independence movements began to take shape. During the decolonisation of Asia after World War II, Indonesia achieved independence in 1949 following an armed and diplomatic conflict with the Netherlands.

Indonesia consists of hundreds of distinct native ethnic and linguistic groups, with the largest and politically dominant ethnic group being the Javanese. A shared identity has developed, defined by a national language, ethnic diversity, religious pluralism within a Muslim-majority population, and a history of colonialism and rebellion against it. Indonesia's national motto, "Bhinneka Tunggal Ika" ("Unity in Diversity" literally, "many, yet one"), articulates the diversity that shapes the country. Indonesia's economy is the world's  by nominal GDP and the 7th largest by GDP at PPP. Indonesia is a member of several multilateral organizations, including the UN, WTO, . It is also a founding member of Non-Aligned Movement, Association of Southeast Asian Nations, Asia-Pacific Economic Cooperation, East Asia Summit, Asian Infrastructure Investment Bank and Organisation of Islamic Cooperation.


Economy of Indonesia
Indonesia has the largest economy in Southeast Asia and is one of the emerging market economies of the world. The country is also a member of G20 and classified as a newly industrialised country.] It is the 16th largest economy in the world by nominal GDP and the 7th largest in terms of GDP (PPP). Its GDP per capita, however, ranks below the world average. Indonesia still depends on the domestic market and government budget spending and its ownership of state-owned enterprises (the central government owns 141 enterprises). The administration of prices of a range of basic goods (including rice and electricity) also plays a significant role in Indonesia's market economy. However, since the 1990s, the majority of the economy has been controlled by individual Indonesians and foreign companies.

In the aftermath of the 1997 Asian financial crisis, the government took custody of a significant portion of private sector assets through acquisition of nonperforming bank loans and corporate assets through the debt restructuring process and the companies in custody were sold for privatization several years later. Since 1999 the economy has recovered and growth has accelerated to over 4–6% in recent years.

In 2012, Indonesia replaced India as the second-fastest-growing G-20 economy, behind China. Since then, the annual growth rate slowed down and stagnates at the rate of 5%.

Since an inflation target was introduced in 2000, the GDP deflator and the CPI have grown at an average annual pace of 10¾% and 9%, respectively, similar to the pace recorded in the two decades prior to the 1997 crisis, but well below the pace in the 1960s and 1970s. Inflation has also generally trended lower through the 2000s, with some of the fluctuations in inflation reflecting government policy initiatives such as the changes in fiscal subsidies in 2005 and 2008, which caused large temporary spikes in CPI growth.

In late 2004, Indonesia faced a 'mini-crisis' due to international oil prices rises and imports. The currency exhange  rate reached Rp 12,000/USD1 before stabilising. Under President Susilo Bambang Yudhoyono (SBY), the government was forced to cut its massive fuel subsidies, which were planned to cost $14 billion in October 2005. This led to a more than doubling in the price of consumer fuels, resulting in double-digit inflation. The situation had stabilised, but the economy continued to struggle with inflation at 17% in late 2005. Economic outlook became more positive as 2000s progressed. Growth accelerated to 5.1% in 2004 and reached 5.6% in 2005. Real per capita income has reached fiscal levels in 1996-1997. Growth was driven primarily by domestic consumption, which accounts for roughly three-fourths of Indonesia's gross domestic product (GDP). The Jakarta Stock Exchange was the best performing market in Asia in 2004, up by 42%. Problems that continue to put a drag on growth include low foreign investment levels, bureaucratic red tape, and widespread corruption which causes Rp 51.4 trillion (US$5.6 billion) or approximately 1.4% of GDP to be lost on a yearly basis. However, there is a strong economic optimism.

As of February 2007, the unemployment rate was 9.75%. Despite a slowing global economy, Indonesia's economic growth accelerated to a ten-year high of 6.3% in 2007. This growth rate was sufficient to reduce poverty from 17.8% to 16.6% based on the government's poverty line and reversed the recent trend towards jobless growth, with unemployment falling to 8.46% in February 2008. Unlike many of its more export-dependent neighbours, Indonesia has managed to skirt the recession, helped by strong domestic demand (which makes up about two-thirds of the economy) and a government fiscal stimulus package of about 1.4% of GDP. After India and China, Indonesia was the third fastest growing economy in the G20. With the $512 billion economy expanded 4.4% in the first quarter from a year earlier and last month, the IMF revised its 2009 Indonesia forecast to 3–4% from 2.5%. Indonesia enjoyed stronger fundamentals with the authorities implemented wide-ranging economic and financial reforms, including a rapid reduction in public and external debt, strengthening of corporate and banking sector balance sheets and reducing bank vulnerabilities through higher capitalisation and better supervision.

In 2012, Indonesia's real GDP growth reached 6%, then it steadily decreased below 5% until 2015. After SBY was succeeded by Joko Widodo, the government took measures to ease regulations for foreign direct investments to stimulate the economy. 

Indonesia managed to increaseits GDP growth slightly above 5% in 2016–2017. However, the government is currently still facing problems such as weakening the currency, decreasing exports and stagnating consumer spending. The current unemployment rate in the  first quarter 2019 is at 5,01%.
Professional Associations
Qualifying as an Accountants
Law and Regulations on Accountancy Practice
The Use of Accountants Title Law No. 34 of 1954 is the legal foundation of State Registered Accountants (Akuntan or Ak.), while The Public Accountant Act (Law No 5 of 2011) regulates public accountants (Akuntan Publik or AP).

Under Law 34 of 1954, the Ministry of Finance (MOF) is responsible for maintaining “state registry for accountants.” As of May 2013, the Ministry of Finance has issued around 55,000 State Registered Accountants certificates. On Dec 29th, 2017, the Government enacted Finance Minister Regulation No. 216/PMK.01/2017 (hereinafter FMR 216/2017) concerning Registered Accountants.

FMR 216/2017 aims to provide guidance on pathways to become a professional accountant in Indonesia, to encourage the development of the accountancy profession in Indonesia, and to give mandates and authority to Professional Accountants Organization (PAO) together with Ministry of Finance to regulate all Professional Accountants in Indonesia.

FMR 216/2017 governs Registered Accountants (RNA) who are entitled to offer non-assurance accountancy services tothrough an accountancy services office, including but not limited to:
  1. regulations concerning state register of accountants (Register Negara Akuntan or RNA), which includes provisions on among others requirements, and procedures of becoming a state-registered accountants (an RNA), professional accountant education/ certification examination, qualifying professional experience and so forth;
  2. regulations concerning accountancy services offices (Kantor Jasa Akuntansi or KJA), which includes provisions on among others permissible legal entities, licensing requirements and procedures, the scope of services offered by a KJA;
  3. regulations concerning development and supervision of RNAs and KJAs, which includes provisions on among others the rights and obligations of an RNA and a KJA;
  4. regulations concerning development and supervision of RNAs and KJAs, which includes provisions on among others the rights and obligations of an RNA and a KJA, and contdevelopment (CPD);
  5. expert advisory committee on RNA qualification;
  6. government-endorsed professional association of RNAs;
  7. goverenace of RNA administration by the MoF; and
  8. provisions concerning transitions from previous regulations of RNA.

In a nutshell, FMR 216/2017 regulates the eligibility, rights and obligations of Registered Accountants. Its core mandate of is that all professional accountants in Indonesia must:
  1. be highly competent, through a process of education, professional examination and relevant work experience in the field of accountancy;
  2. maintain professional competence through continuing professional education and continuing professional development;
  3. be a good standing member of a PAO in Indonesia; and
  4. comply with the professional standards and code of conduct.

In practice, the regulation requires that to become a state-registered accountant a person must meet the following requirements:
  1. has passed Chartered Accountants Indonesia (CA), Certified Public Accountant (CPA), and Certified Profesional Management Accountant (CPMA) examination conducted by the PAO;
  2. has had relevant work experience in the field of accounting; and
  3. be a good standing member of the PAO.

Law No. 5 of 2011 governs the public accountant profession including the auditors including:
  1. scope of CPA service;
  2. licensing of CPA and accounting firms;
  3. entitlement, obligation, and prohibition for the CPA and CPA office;
  4. a partnership between inter-CPA office and the partnership between local CPA office and foreign CPA office or foreign audit organization;
  5. a professional association of the CPA;
  6. professional CPA Committee;
  7. guidance and supervision by the Minister;
  8. administrative penalty; and
  9. criminal provision.

A bureau under the Ministry of Finance called “the Finance Profession Supervisory Centre” (PPPK) has oversight of the practice of accounting firms and appraisers. PPPK is also a member of the International Forum of Independent Auditor Regulators (IFIAR).

The bureau issues Registered Accountants certificates as well as licences for practising public accountants and has a right to administer sanctions to CAs and CPAs who violate the regulations. PPPK’s main responsibilities are:
  1. collecting, processing and analysing the requirements to be Registered Accountants, CPA and CPA office;
  2. preparation of policy formulation in the field of state registered accountant, public account;
  3. development and supervisory of accountancy services firm, public accounting services; and
  4. presenting information on Registered Accountants, CPA.
 
PPPK’s functions include:
  1. preparation of materials for the formulation of State registered Accountants, CPA and appraisal profession development, licensing, and development of accounting services and appraisal services;
  2. preparation and implementation of program monitoring and inspection activities of state registered accountant, public accountants and public appraisal; and
  3. presentation of State registered Accountants, CPA and appraisers information.

Some of the authorities are shared with and/or delegated to other institutions, for example:
  1. Professional Standards/Audit standard-setting and CA/CPA examination are carried out by the professional association of accountants/public accountants.
  2. Continuing Professional Education Program is carried out jointly by the MOF and or by the professional association of accountants/public accountants.

 

Specific Regulation
Monitoring Committee

Regulated Accounting Services

Audit / Assurans Services
Approval (license) as Public Accountant 


NAB Membership and/or PRA Registration

NAB Requirement :

Yes, must be IAPI Member (Certified Public Accountant).



NAB Membership and/or PRA Registration Requirement
(such as examination, test, recognised qualifications, etc)

NAB Requirement:

Must be CPA, must complete of the below:

  1. D4 / S1 / S2 / S3 graduates majoring in accounting;
  2. passed the examination of the public accounting profession;
  3. have accounting or audit work experience


PRA Requirement :

Must obtain approval/audit license from MOF. 


Citizenship Requirement

No, Only Residence Requirement


Remarks

Subject to domestic regulations such as Public Accountants Act, Companies Act, MOF (AGD) Guidelines ,immigration & employment laws, etc.

Eligibility requirement, where applicable (ASEAN CPA/RFPA)

Not open to RFPA.

Accountant Services

Non-Regulated Accounting Services

Professional Accountant in Business
NAB Membership and/or PRA Registration

Not Applicable.


NAB Membership and/or PRA Registration Requirement
(such as examination, test, recognised qualifications, etc)

Not Applicable.


Citizenship Requirement

Not Applicable.

Remarks

Not Applicable.

 

Eligibility requirement, where applicable (ASEAN CPA/RFPA)

Open to ASEAN CPA / RFPA.

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