A Law on Public Accountants: Restrictions on Foreign Accountants

The Bill on Public Accountants (“Law”) was passed by the House of Representatives on 5 April 2011, serving to provide protection and certainty for the public accountant profession and their clients.

Previously the profession has never been fully regulated at the level of a law. With the Law enacted, the profession is now regulated by 16 chapters and 62 articles.

Currently 80% of the profession is dominated by foreign accountants. Whereas, according to the Secretary General of the Indonesian Public Accountant Institute (IAPI), there are only 920 registered public accountants employed in 501 Public Accountant Offices. This is substantially below neighboring countries such as Singapore and the Philippines, which have 15 thousand Public Accountants each, while their populations are significantly smaller than that of Indonesia.       

Pursuant to Article 7 (1), foreign public accountants will be limited when practicing in Indonesia, and can only apply for a license to practice if Indonesia has a mutual recognition agreement concerning the public accountant profession with the country of the foreign accountant applicant. 

A permit issued by the Ministry of Finance is valid for 5 years (Articles 5 (1) and (2)), additionally, in order for a foreign accountant to be eligible to obtain a license, they must fulfill the following requirements:

The rationale behind the provisions on foreign accountants is to protect Indonesian accountants, and pursuant to Article 17 a public account office (KAP) can only employ foreign accountants in a 1:10 ratio to Indonesian accountants.

Further provisions on foreign accountants will be stipulated in a Government Regulation (Article 7(4)).

The Law repeals and replaces Law No. 34 of 1954 on the Use of Accountant Title, along with its implementing regulations.

In accordance with Law No. 10 of 2004 on the Formation of Laws and Regulations, the Law will come into force within 30 days of its passage or when signed by the President, whichever is the earliest.