"We were very advanced with our planning but under these conditions there are too many questions, too many question marks," Werder board chairman Klaus Filbry said in a statement on Tuesday.
"We want to show our best side internationally but that would not have been possible this time. So we changed our plans at the last minute."
Werder, who are ninth in the Bundesliga behind newly crowned champions Bayern Munich, did not reveal any fallback plans for a tour elsewhere in Asia.
Indonesian football has been plunged into crisis after the row with the domestic league also suspended by the government, who wanted two clubs banned for ownership issues but had their recommendations ignored by the PSSI.
Werder said they noted FIFA's "serious displeasure" with the situation in Indonesia when deciding to cancel the tour.
(Reporting by Karolos Grohmann. Writing by Patrick Johnston Editing by Amlan Chakraborty)
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