This paper analyzes Chinese investment in the financial technology (fintech) sector in Indonesia, which ranges from payment systems to lending to wealth management. It will specifically address fintech lending both by Chinese investors and their domestic partners as a major source of controversy in Indonesia. It elaborates on how Chinese investors respond to the evolving regulatory environment in Indonesia and addresses local debates over the intentions and structure of Chinese investors in the Indonesian fintech sector, comparing those debates to the actual situation of Chinese FDI in Indonesia.

In spite of the controversy facing Chinese investment in Indonesian fintech, especially in the area of payday loans, there is insufficient evidence to conclude that the problems with the industry are the result of Chinese investment bringing bad business practices and governance to Indonesia. Instead, the problems can be explained by the nature of the industry, Indonesia’s rapidly expanding middle class, and regulators that must react to problems as they arise rather than controlling innovation to allow the market to meet consumer needs.