INDONESIA Law and Practice Contributed by: Maria Sagrado, Frederick Simanjuntak and Stephanie Kandou, Makarim & Taira S.
bursed ESG credit of IDR285 trillion (USD18 billion) up to September 2024, an increase of almost 13% from the previous year. 2. Authorisation 2.1 Providing Financing to a Company In Indonesia, only banks, financial companies (such as multi-finance companies) and peer-to-peer lending (P2P) platforms are authorised to provide financing to companies. Multi-finance companies must provide financing for goods or services. P2P platforms can- not use their own funds for providing financing. The platform only connects between lenders and borrow- ers. Therefore, the funds must be from the lenders accessing to the platform. 3. Structuring and Documentation 3.1 Restrictions on Foreign Lenders Providing Loans Foreign lenders are not restricted from providing loans to Indonesian borrowers, as long as the loans are provided on a non-solicitation basis. However, if foreign lenders actively market their loan products within Indonesia, it may be deemed as doing busi- ness in the country, which would trigger the need for a legal presence and business licence from Indonesian Foreign lenders providing financing to Indonesian companies may receive security and guarantees from the Indonesian borrowers. These security documents can include pledges (of shares), fiduciary security (over moveable assets, receivables, inventory, etc), mortgages (on land and buildings). Guarantees can be in the form of personal or corporate guarantees. 3.3 Restrictions and Controls on Foreign Currency Exchange Indonesian borrowers do not require approval or a licence to convert rupiah into foreign currencies. However, banks in Indonesia cannot transfer rupiah currency abroad under any circumstances. Conse- authorities, specifically (from the OJK). 3.2 Restrictions on Foreign Lenders Receiving Security
quently, repayments of foreign loans must be made in foreign currency. Bank Indonesia Regulation require banks in Indone- sia to ensure that any customer conducting foreign currency transactions against the rupiah exceeding USD100,000 (or its equivalent in other currencies) per month provides certain documents, such as a loan agreement. The customer must also submit a copy of the underly- ing transaction document (such as a loan agreement) to the relevant bank for any outgoing transfer in for- eign currency exceeding USD100,000 (or its equiva- lent in another currency). 3.4 Restrictions on the Borrower’s Use of Proceeds There are no restrictions on the borrower’s use of loan or debt securities proceeds, as long as the financed The use of agents, such as facility agent or security agent, is permitted and common practice in Indone- sia. A security agent, for example, is appointed to hold Indonesian security rights on behalf of lenders. For- eign lenders usually appoint a bank in Indonesia to act as the security agent, allowing the agent to hold the original documents of the (Indonesian) borrowers, facilitate communication with them and performing enforcement (if any). 3.6 Loan Transfer Mechanisms activities are not prohibited by law. 3.5 Agent and Trust Concepts In Indonesia, the most common loan transfer mecha- nism is the assignment of receivables ( cessie ), regu- lated under the Indonesian Civil Code. When a loan is assigned through a cessie , any security interest securing the loan will follow or remained attached. To make the assignment effective, the existing lend- er must notify the security provider, who must then acknowledge the notice. 3.7 Debt Buyback Debt buyback by the borrower or sponsor is possi- ble, unless the relevant loan agreement or guarantee agreement explicitly restrict it.
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