INDONESIA Law and Practice Contributed by: Maria Sagrado, Frederick Simanjuntak and Stephanie Kandou, Makarim & Taira S.
Makarim & Taira S. Summitmas I, 16th & 17th floors Jl. Jend. Sudirman Kav. 61–62 Jakarta 12190 Indonesia Tel: +6221 5080 8300, 252 1272 Fax: +6221 252 2750, 252 2751 Email: info@makarim.com Web: www.makarim.com
1. Loan Market Overview 1.1 The Regulatory Environment and Economic Background
greater complexity. This is driving innovation in loan structures and terms, as well as the need for careful financial planning and risk management. 1.4 Alternative Credit Providers Alternative credit providers, especially peer-to-peer (P2P) lending platforms and multi-finance compa- nies, have recently gained popularity in Indonesia and attracted considerable investor interest. Multi-finance companies, in particular, have diversified their busi- ness models to broaden their product offerings in Indonesia. 1.5 Banking and Finance Techniques The use of HoldCo structures, often involving a Singa- pore-based company, is a common practice in Indo- nesia. While preferred equity is used by some com- panies, its application is not widespread. Preferred equity structures are usually used more for control purposes, rather than as a finance technique, enabling relevant shareholders to gain greater control through voting rights and involvement in company manage- ment. 1.6 ESG/Sustainability-Linked Lending Indonesia has seen significant growth in ESG and sustainability-linked lending, particularly in sectors such as palm oil, cement, and consumer goods. These loans encourage borrowers to meet sustain- ability performance targets, linking their loan terms to their ESG performance. In 2024, PT Indonesia Infra- structure Finance (IIF) had integrated sustainable principles into numerous projects across the country, achieving an ESG Entity Rating of 2 from Sustainable Fitch. Meanwhile, state-owned Bank Mandiri had dis-
The loan market in Indonesia has been influenced by recent economic cycles and regulatory changes. Loan demand has increased, particularly in sectors such as mining and related industries (like smelters), as well as manufacturing. Regarding the regulatory environ- ment, the Financial Services Authority (OJK) has been actively strengthening financial sector regulations as part of implementing the Financial Sector Omnibus Law issued in 2023. Near the end of 2024, the OJK issued new regulations related to banking activities, trading of digital financial assets including crypto, and alternative credit scoring. In February 2025, an invest- ment agency named Daya Anagata Nusantara (Danan- tara) was launched to advance national development and prosperity by leveraging state-owned enterprises and building a world-class sovereign wealth fund to drive Indonesia’s economic transformation. 1.2 Impact of Global Conflicts The fluctuations in foreign currency, especially the US dollar, significantly impact the loan market, especially cross-border loans involving foreign banks providing financing to Indonesian companies. Chinese banks have been particularly active in financing projects in Indonesia. Therefore, China’s economic conditions will also be a major factor influencing the Indonesian loan market. 1.3 The High-Yield Market The high-yield market has expanded financing options for Indonesian companies, albeit with higher costs and
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