Indonesia is the largest country in South East Asia, with a sizable part of its population working and living abroad. Migrants come from with villages as remote as East Lombok, one of the districts in eastern Indonesia with a high dependency on remittances.
Most of the overseas Indonesians live and work in Malaysia (35%). Others are in Saudi Arabia, UAE, Singapore, Bangladesh, Netherlands, Australia and other countries around the world. Current data from the Indonesian National Agency for the Protection and Placement of Migrant Workers (BNP2TKI) puts the number of migrant Indonesian workers at 4.5 million.
A majority of the emigrants work in the domestic sectors in the respective host countries and close to 70% of them are women. The families they have left behind are mostly subsistence farmers who depend hugely on remittances especially when their crop fails or disasters hit.
In 2017, a total of $8,997 million was sent to Indonesia. Close to 40% of this came from Saudi Arabia, 25% from Malaysia, and 8.6% from the United Arab Emirates. Despite the crucial role diaspora remittances play, the World Bank established that many migrant workers still use risky channels to send money to their families. Part of the reason is that most of them are now aware of the formal remittance service providers available.
This guide seeks to shed light on the various formal channels Indonesians in the diaspora can use to send money home, the information they need, and the crucial factors to bear in mind when sending money home. For this and more, let’s dig in.
Sending money to Indonesia is simple and easy. Follow these steps to get started.
There are multiple ways to easily send and receive money in Indonesia but these will largely depend on the provider you decide to use. Below you will find everything you need to know about sending and receiving money.
Instead of sending money through account mediators, there are formal ways you can transfer funds to your family back home. What is even more attractive is that these channels cost less, are secure, and take lesser time to get your money across.
As part of Project Greenback 2.0. initiated by the World Bank, several sector players such as Indonesia’s Central Bank, BNP2TKI, Indonesian Financial Service Authority (OJK), and local governments have come together to promote formal remittance channels. Below are the ways you can send money to Indonesia.
Indonesia has 115 commercial banks that are fully licenced under the Banking Act to participate in the payment system. Rural banks are about 1,620 but are restricted as to the type of transactions they can execute. As long as the recipient has an account with a bank that can handle international transfers, you can directly deposit to their account.
Apart from international banks such as the Bank of Tokyo Mitsubishi, HSBC, Standard Chartered Bank, Citibank, PT Bank Commonwealth, and the big national banks, transfers to other banks in Indonesia may take a much longer time. This is caused by several factors among them the intermediary banks involved in the delivery of the funds.
Wire transfers can take anywhere between 3 to 5 days to get to the recipient accounts. In most cases, fees are paid by the sender, but in some cases, the recipient may be charged landing fees by the receiving bank.
The rate of financial inclusion in Indonesia is estimated at 65%. However, disaggregated data shows that many people living in rural areas in provinces such as West Nusa Tenggara, hardly access formal banking services.
As a member of G20, Indonesia is a key supporter of the initiative to cut down on remittance cost to 5%. As the remittance market becomes attractive, lots of money transfer service providers are setting up shop in Indonesia.
In October 2016, Transferwise launched in Indonesia, allowing its customers worldwide to send money directly to Indonesian rupiah (IDR)-denominated bank accounts.
In December 2016, WorldRemit and Xpress Money entered into a partnership to offer instant cash pickup transfers in the country. Together, they have over 11,000 cash pickup locations in Indonesia, thanks to their partnership with Bank Rakyat.
Towards the end of May 2018, Transfast partnered with POS Indonesia, the country’s postal service, to offer money remittance services to Indonesia for the millions of its diaspora customers.
Others money transfer services such as Xoom, OFX and WorldFirst also provide online money transfer services to Indonesia. These providers are usually fast, affordable, and secure. All you need is to sign up for a transfer account, input the recipient’s details, pay for your transfer using a debit, credit, or direct bank debit and send.
You can make your transfer on the website or through the provider’s mobile application and track it on its way to the recipient.
Western Union and Money Gram are among the oldest money transfer operators that allow you to deposit money at an agent in the sending country and transfer to your family. You can choose to send your money online or let agents handle the process for you.
You can also begin the process online and complete it in-store. Both providers have mobile apps to make the transfer process quicker and simpler. As of June 30, 2018, Western Union had over 14,000 pick up locations in Indonesia.
For the 200,000+ Indonesians working and living in Singapore, the realtime mobile money remittance service launched by Singtel and Telkomsel in March 2017 opens lots of possibilities. The SingCash service allows its customers to send money from Singapore to their families in Indonesia through a disbursement network coverage of 4,500 PT Pos Indonesia’s cashpoints.
You can give your family and friends the gift of talk time by topping up their mobile phones with airtime. Xoom has partnered with 10 carriers in Indonesia to give you the opportunity to send airtime directly to your family and friends. The carriers supported include Axis, Ceria, Esia Bakrie Telecom, Indosat Ooredoo, Smartfren, Telkomsel Kartuas, simPATI, and Three mobile.
After you register for an account and get verified, you are free to send money to Indonesia. However, at the time of transfer, you’ll be required to provide more information to facilitate the movement of funds. Though the information may vary from one provider to another, the following is a typical list of what is needed.
Depending on the bodies that regulate the money transfer service provider you are using, you may be asked for more information.
Based on the analysis of transfers to Indonesia along the major remittance corridors, there are 3 ways you can receive money in the country. You may choose direct bank deposit, cash pick up from agents or direct mobile money deposit.
Money transfer providers have created relationships with major banks across Indonesia to simplify the process of receiving money in the country. The following are some of the participating banks though they differ with the provider:
It takes 1-3 days for you to receive the money into your bank account.
Whether you are sending money to Bali or North Sumatra, most money transfer providers have a strong agency network to support your transfer.
Xoom has partnered with PT Bank Rakyat Indonesia to serve its customers through 10,072 cash pickup locations. For instance, when sending to Alampura City in Bali, there are 22 Xoom locations the recipient can collect money from.
TransferWise customers can pick their cash from PT Bank Rakyat Indonesia or PT Bank Negara Indonesia
In December 2016, WorldRemit and Xpress Money entered into a partnership to widen their disbursement network coverage to more than 11,000 cash pickup locations. They jointly leverage PT Bank Rakyat Indonesia branches as pickup locations.
Ria has agreements with Bank BRI and BNI to use their networks as cash pickup points.
Cash pickups are instant and more appropriate for receiving small amounts. This is mainly because of safety reasons
You can receive money directly into your mobile wallet from specific providers. This is instant and gives you flexibility and safety.
On November 6, 2019, TransferWise enabled direct mobile wallet deposits through GoPay, OVO, and DANA.
On July 22, 2014, WorldRemit launched a partnership with Indosat Dompetku to allow its customers received money directly into their mobile accounts. You can use the balance to make payments for goods and services or withdraw at ATMs or service agents.
In February 2013, Western Union entered into a partnership with PT XL Axiata, an Indonesian telecommunications services operator, to provide mobile money transfer service.
If the funds are sent through direct bank deposits or mobile wallet, you don’t need to do anything unless you want to withdraw. For cash pickups, you’ll have to provide the following documents and information.
Based on transaction narrations given to the various money transfer service providers, overseas Indonesians have lots of reasons for sending money home.
Remittances support close to 30% of expenditures in remittance-receiving households. Food items take the lion’s share (53%) of family expenditure budgets. Household durables, transport, and rent are the other expenditure items.
About 6% of remittances to Indonesian households is allocated to education. Funds for tuition fees and school-related costs are normally sent regularly at the beginning of the term.
Thanks to initiatives by the Investment Coordinating Board (BKPM), many Indonesians in the diaspora are increasingly sending money home to invest in real estate, businesses, and financial assets in the Indonesia Stock Exchange.
During emergencies such as the 2018 earthquake that caused flooding, deaths and destruction of property particularly in the city of Palu on Sulawesi Island, remittances increased in frequency and size. Also, remittances are usually sent in response to emergencies at the family level such as sicknesses and accidents.
Many Indonesians in the diaspora send money for house constructions or renovations. This is mostly the case for immigrants coming from poor households as they prioritise the basic needs before making investments in businesses.
Funerals, engagements and weddings can be such an expensive affair in Indonesia. Families reach out to their diaspora friends and relatives for support. In most cases, social contributions are sent together with family support funds.
With the features discussed in the preceding sections of this guide, it makes sense why money transfer service providers are mostly preferred by diaspora Indonesians sending money home.
Before you pay for your transfer and press the ‘Send’ button to your family and friends, think of the following factors.
When sending money to Indonesia, you have lots of formal and legal options to use. Don’t fall prey to the risky, informal channels that end up charging you more with no assurance that your money will be delivered.
Sending money anywhere else in the world is as easy as sending money to Indonesia. If you’re looking to send money to another country, here is the list of the most popular destinations.
Jonathan is the founder and editor of MoneyTransfers.com. Jonathan is highly experienced in the currency transfer market, having previously worked in the FX trading industry, alongside being an avid traveller. Using his knowledge he identified a need for transparency and further education to help people save money on their money transfers, leading to the creation of MoneyTransfers.com