Infrastructure development has become the top priority for the government under President Joko ‘Jokowi' Widodo. Total government spending for infrastructure in Indonesia increased by 51 per cent from US$11.7 billion in 2014 to US$15.5 billion in 2015.2 The Jokowi administration is continuing with many initiatives intended to increase infrastructure spending to 2019.

According to the foreign debt statistics of 2017 released by Bank Indonesia (BI), Indonesia's foreign debt at the end of the first quarter of 2017 reached US$326.3 billion. Of this amount, the outstanding public sector foreign debt amounted to US$166.5 billion (51 per cent), while private sector foreign debt amounted to US$159.9 billion (49 per cent).

Private sector foreign debt position is concentrated in the finance, manufacturing, mining, electricity, gas and water supply sectors. These four sectors amounted to 76.5 per cent of the total private sector foreign debt.

Recent deal activity

One recent, significant deal in Indonesia's infrastructure financing is a loan agreement worth US$4.5 billion, signed in May 2017 by the China Development Bank (CDB) and the Indonesian-Chinese consortium PT Kereta Cepat Indonesia-China.3 The loan will be used to fund a bullet train project in Indonesia, the country's first rapid-train rail link connecting its capital city, Jakarta, to the textile hub of Bandung. The loan facility is equal to 75 per cent of the estimated project cost of US$6 billion.

Another transaction worthy of note is a syndicated loan agreement amounting to US$916.8 million, signed in 2016 between Indonesia's state-owned electricity company, Perusahaan Listrik Negara (PLN) and state lenders Bank Mandiri, Bank Negara Indonesia and Bank Rakyat Indonesia. The loan will be used to fund a government project to build power plants to produce an additional 35,000 MW of electricity for the country.4 Further, PLN plans to raise another US$1.5 billion by mid-2017 to fund the project through global bonds.


i First fintech lending Regulation in Indonesia

The Indonesian Financial Service Authority (Otoritas Jasa Keuangan) (OJK) has issued the first regulation on financial technology (fintech) lending activities in Indonesia, the OJK Regulation No. 77/POJK.01/2016 (OJK Regulation 77) dated 28 December 2016, concerning information technology-based lending services. This regulation is expected to support the growth of the fintech lending industry, or peer-to-peer (P2P) lending platforms in Indonesia as a new financing alternative to conventional financial services industries. It is also expected that P2P lending providers (Providers) will open access to overseas or domestic loans from various areas to the Indonesian general public as part of government efforts to support the National Strategy of Financial Inclusion.5

The provisions of OJK Regulation 77 include organisational requirements on providers' obligations and restrictions related to lending services.

Organisation of Providers

The entity of Providers can be established in the form of a limited liability company (Perseroan Terbatas) (PT) or as cooperatives. Providers in the form of a PT (PT Providers) are subject to the Indonesian Company Law (Undang-Undang Perseroan Terbatas).6 PT Providers can be a domestic ownership company or a foreign investment company with a maximum direct or indirect foreign ownership of 85 per cent total shares, while Providers in the form of cooperatives (Cooperatives Providers) must consist only of local members as required by Cooperatives Law No. 25 of 1992.

PT Providers must have a subscribed capital of at least 1 billion rupiah at the time of application for registration, to be increased to at least 2.5 billion rupiah when applying for the P2P lending licence.7 This requirement also applies to Cooperatives Providers for minimum equity capital.

Registration and licence

The Provider must apply for registration to start P2P lending business activities to the OJK and apply for a licence at the latest one year after the issuance of the registration certificate.

Loans, lenders and borrowers

The maximum amount of loan that can be provided to each borrower is 2 billion rupiah. The regulation does not specify any maximum interest rates; however, the Provider may provide input on the interest rates proposed by the lender and the borrower in considering fairness and the development of the national economy. OJK Regulation 77 allows either local or foreign parties to be lenders, provided that certain offshore loan requirements apply under relevant regulations. Borrowers must be individual or legal entities originating and domiciled in Indonesia.

Obligations and restrictions

OJK Regulation 77 provides obligations and restrictions to be complied by Providers and users (lenders and borrowers) in conducting P2P lending activities as follows:

Risk management

The Provider must provide an escrow account and a virtual account for managing P2P lending activities. The loans must be provided by lenders in virtual accounts, while the repayment of loans by borrowers must be paid through escrow accounts and is to be forwarded to the virtual accounts of lenders. Further, it is mandatory for the Provider to use data centres and disaster recovery centres located in Indonesia. The Provider is also required to meet the minimum standards for IT systems, IT risk management, IT security system resistance and failure, and transfer of IT systems.

Qualifications for employees and management

The Provider must have human resources with IT expertise and have at least one director and one commissioner with experience of at least one year in the financial services industry.

Users and data protection

The Provider must maintain data privacy and protection for users, conduct an audit trail of all lending activities and provide security for IT systems.

Obligatory reporting

A Provider that is registered with the OJK must provide quarterly reports, which include information on users, loans rating and quality and lending activities. Further, a Provider that is licensed by the OJK is required to submit monthly and annual reports to the OJK. The reports must include financial and working performance of the Provider, electronic documents of the lending activities conducted by the Provider and user complaints and actions taken by the Provider to mitigate the issues.


The Provider is prohibited from, among things, conducting any business activities other than P2P lending business activities, acting as a lender or borrower on its lending platforms, providing any guarantees for other parties' liabilities, issuing bonds, providing recommendation to users and providing misleading information.


The OJK may impose administrative sanctions for any breach or failure of the Provider in complying with OJK Regulation 77. Administrative sanctions may be imposed in the form of: (1) warning letters; (2) fines; (3) restrictions on business activities; or (4) revocation of licence.

ii Prudential principles in offshore loan activities

In less than 10 years since 2014, the number of private sector offshore loans increased almost threefold from US$54.3 billion at the end of 2005 to US$159.3 billion at the end of September 2014. Private sector offshore loans reached 54.5 per cent of total offshore loans in Indonesia.8 Therefore, on 29 December 2014, the Indonesian central bank, Bank Indonesia (BI), issued BI Regulation No. 16/21/PBI/2014 on the Implementation of Prudential Principles in Managing Foreign Debt of Non-Bank Corporations (BI Regulation 16). This regulation was enacted to govern the prudential principles that must be implemented by non-bank corporations to mitigate risks that may arise from private offshore loan activities, particularly currency risk, liquidity risk and overleverage risk.

Pursuant to this regulation, non-bank corporations with foreign debts in foreign currency must implement prudential principles by fulfilling requirements on certain values of hedging ratios, liquidity ratios and minimum credit ratings.

Recently, an amendment to BI Regulation 16 was issued by BI through BI Regulation No. 18/4/PBI/2016 dated 22 April 2016 (BI Regulation 18).

Under BI Regulation 18, multi-finance companies may now conduct offshore loan activities without being subject to the credit rating requirement as previously required under BI Regulation 16. The exemption is given as long as certain requirements on the level of financial soundness and gearing ratio are fulfilled. Indonesia Eximbank (Lembaga Pembiayaan Ekspor Indonesia, or LPEI) has been exempted from this credit rating requirement owing to government policy in supporting export activities in Indonesia.

The key provisions of BI Regulation 16 as amended by BI Regulation 18 are highlighted below.

Hedging ratios

Non-bank corporations with offshore loans in foreign currency are obliged to have a minimum hedging ratio of 25 per cent of the negative balance between Foreign Currency Assets and Foreign Currency Liabilities with: (1) a maturity period up to three months; and (2) a maturity period of between three and six months from the end of the quarter.

Under BI Regulation 16, as of 1 January 2017, any hedging transactions must be undertaken with banks in Indonesia to fulfil the regulatory requirement. Hedging transactions can be conducted through derivative transactions in the form of forward, swap or option transactions. Any hedging transactions not undertaken with banks in Indonesia will not be considered as fulfilment of the hedging ratio requirements, and the receivables derived from the transactions will not be considered as foreign currency assets.

Foreign Currency Assets as defined under the regulation include cash, demand deposits, savings accounts, term deposits, accounts receivables, inventories, marketable securities and receivables originating from forward, swap and option transactions. Foreign Currency Liabilities include all foreign currency liabilities to residents and non-residents, including those originating from forward, swap and option transactions.9

Liquidity ratios

A minimum liquidity ratio requirement of at least 70 per cent is applied to non-bank corporations with offshore loans in foreign currency. The fulfilment of the minimum liquidity ratio requirement shall be conducted by maintaining foreign currency assets against foreign currency liabilities that will be due within three months of the end of the quarter.

Credit rating requirement

Non-bank corporations with offshore loans in foreign currency are required to have a minimum credit rating of BB− or equivalent, issued by a rating agency that is recognised and authorised by BI. Authorised rating agencies under the regulation include Moody's Investors Service, Standard & Poor's, Fitch Ratings and PT Pemeringkat Efek Indonesia (PEFINDO).10

This credit rating requirement is exempted for: (1) offshore loans in the form of refinancing, provided the refinancing does not increase its principal amount; (2) offshore loans to fund infrastructure projects sourced from bilateral/multilateral international institutions; (3) offshore loans to fund central and local government infrastructure projects; (4) offshore loans guaranteed by bilateral/multilateral international institutions; and (5) offshore loans in the form of trade credit. The bilateral/multilateral institutions recognised under the regulation include the International Finance Corporation, the Japan International Cooperation Agency, the Asian Development Bank, the United States Agency for International Development, the European Bank for Reconstruction and Development and UK Export Finance.

Under BI Regulation 18, the credit rating requirement exemption is expanded to offshore loan activities conducted by multi-finance companies and Indonesia Eximbank.

A non-bank corporation may use corporate credit rating (issuer rating) or debt securities credit rating (issue rating) pursuant of the type and maturity of the loan. The validity period of the credit rating should be no more than two years since its issuance.

Reporting obligation

BI requires non-bank corporations to report regularly on foreign exchange activities, including plans and realisations of offshore loans, and on the implementation of prudential principles. Foreign exchange reports must be submitted to BI monthly while the implementation of prudential principles reports must be delivered quarterly.11


Non-bank corporations that violate the obligation to comply with the implementation of prudential principles under BI Regulation 16 shall be liable to administrative sanctions in the form of a written warning by BI. BI will also provide information on administrative sanctions to related parties, including: (1) relevant creditors abroad; (2) the Ministry of State-Owned Enterprises (SOE) in the case of SOE corporations; (3) the Directorate General of Taxation of the Ministry of Finance; (4) the OJK; and (5) the Indonesia Stock Exchange (IDX), for publicly listed corporations.12

Furthermore, non-bank corporations that are incompliant with the reporting obligation will be subject to administrative sanctions in the form of fines.13


i Withholding tax

Withholding tax is applicable to domestic or foreign lenders for the interest payable on the principal loan. Under the Income Tax Law, any income received by domestic or foreign taxpayers will be subject to withholding tax, including interest incurred from loans, which includes premiums, discounts and compensation for loan repayment guarantees.14

A foreign individual or a foreign entity not domiciled in Indonesia but which receives or accrues income from Indonesia will be considered as a foreign or non-resident taxpayer under the Income Tax Law. Interest payments made to a foreign lender, either a foreign individual or entity, will be subject to a 20 per cent withholding tax.

If a foreign lender resides in a jurisdiction that has a tax treaty with Indonesia, the withholding tax rate may be reduced or eliminated under the provisions of the tax treaty. Indonesia has tax treaties with 65 countries, including Australia, Austria, Belgium, Canada, China, Denmark, Egypt, Finland, France, Germany, Hong Kong, India, Italy, Japan, North Korea, South Korea, Luxembourg, the Netherlands, New Zealand, Norway, Singapore, Spain, Sweden, Switzerland, Taiwan, the United Arab Emirates, the United Kingdom and the United States.

ii Registration fees, notary fees and stamp duty

Registration and notary fees for security over land (mortgages) and fiduciary securities are normally applied based on the value of the secured amount.

Particular to fiduciary transfers, a government regulation imposes a limitation on notary fees for preparing a deed of fiduciary transfers.15 The notary fees are capped as follows:

  • a a maximum 2.5 per cent of security values up to 100 million rupiah;
  • b a maximum 1.5 per cent of security values between 100 million and 1 billion rupiah;
  • c a maximum 1 per cent of security values above 1 billion rupiah, although the fee can be determined as agreed between the notary and the relevant party.

For documentary taxes, any agreement signed by the parties with a transaction value above 1 million rupiah are subject to a stamp duty of 6,000 rupiah.


i Security

The most common forms of security under Indonesian law are described below.

Real estate (land)

Security rights over land (Hak Tanggungan) may also be understood as mortgage in other jurisdictions. Security rights over land is commonly taken to secure land with land titles and all fixtures attached to it for the purpose of securing the repayment of loans.

Security rights over land is a security right governed by Law No. 4 of 1996 on Security Rights Over Land Including Objects Related to the Land (Law 4). Under Law 4, security rights over land will not entitle the security rights holder to ownership of the land title upon the borrower's default. The law, however, grants the security rights holder the right with executorial force to sell the land when the borrower is in default, either privately or through public auction, to satisfy loan repayments from proceeds of the sale. The security rights holder will be entitled to the preferential right for the debt settlement over the other creditors.

A deed of grant of security rights over land must be drawn up by and signed before the land deed officer (Pejabat Pembuat Akta Tanah) of the jurisdiction where the secured land is located. The deed must be drawn up in the official Indonesian language, Bahasa Indonesia, and in the form provided by the land deed officer. Subsequently, the deed of grant of security rights over land must be registered at the relevant land registration office (Kantor Pertanahan) of the National Land Agency (Badan Pertanahan Nasional). The security rights over land is effective on the date of registration in the land register maintained by the relevant land registration office. Upon registration of the security rights, the land registration office will issue a certificate of security rights over land to the security holder.

Fiduciary security

Fiduciary security is the common form of security over moveable assets, either tangible or intangible, and certain immoveable assets such as buildings which cannot be the subject of security rights over land under Law 4. Moveable assets that can be taken as fiduciary security include machinery, raw materials, inventory, and vehicles. Receivables can also be taken as fiduciary security.

Fiduciary security is governed under Law No. 42 of 1999 on Fiduciary Transfer (Law 42). As with security rights over land, fiduciary security grants the fiduciary security holder the right with executorial force to sell the secured assets, either privately or through public auction, when the borrower is in default. The fiduciary security holder is also entitled to the preferential right to debt settlement over other creditors.

A deed of fiduciary transfer agreement must be drawn up by and signed before a notary. This fiduciary deed must be in Bahasa Indonesia and is to be the underlying agreement between the lender and the borrower. Under this deed, the borrower (transferor) transfers the legal title over the secured assets to the lender (transferee) for so long as the debt remains outstanding. The fiduciary deed must be registered at the relevant fiduciary registration office. The fiduciary deed is perfected on the date of registration in the fiduciary register maintained by the fiduciary registration office. Upon registration, the fiduciary registration office will issue a certificate of fiduciary security to the security holder.


A pledge is a form of security that can only be taken over moveable assets, either tangible assets (such as machinery, equipment and vehicles) or intangible assets (such as shares, account receivables, bonds, debentures, and patent rights), to secure a specified loan.

Pledge security is governed under Articles 1150 to 1160 of the Indonesian Civil Code (ICC). Under the ICC, a pledge must be made by agreement between the debtor or the borrower (pledgor) and the creditor or the lender (pledgee). Indonesian law does not require the pledge agreement to be made as a notarial deed or as a private agreement. However, in practice, pledge agreements are normally made in the form of notarial deeds for the purpose of evidencing in court. In addition, pledge agreements may be attached with a power of attorney to sell the pledged assets, providing the pledgee to sell the pledged assets privately without using a public auction mechanism.

Pledges entitle the pledgee to the preferential right over other creditors to satisfy loan repayments from proceeds of the sale of the pledged assets. The perfection of pledge security may be different depending on the form of the pledged assets. The establishment of a pledge can be described as follows.

  • a A pledge over tangible moveable assets, such as machinery, equipment or vehicles, will be effective on the deliverance of the goods to the pledgee. The pledged assets must be in the possession of the pledgee.
  • b A pledge over intangible moveable assets, such as receivables, will be perfected upon the notification of the pledge to the concerned party, by which the right of pledge will be enforced against the concerned party.
  • c A pledge over shares will be effective upon the notification and recording of the pledge in the share register of the relevant company. If the shares are in certificated form, the original certificate of shares must be delivered to the pledgee. For shares listed on the IDX, the pledge can be established upon the notification of the pledged shares to the company and the recording of the shares by the Stock Administration Bureau (Biro Administrasi Efek) appointed by the company in the company's share register. If the shares are listed in scriptless form, the pledgor must also notify the Indonesian Central Securities Depository (PT Kustodian Sentral Efek Indonesia), and it will certify the pledged shares.

By the enactment of Law 42, land can only be taken as security under security rights over land, and not under hypothec. Hypothec is a form of security that can be taken over immoveable assets that cannot be secured by security rights over land. Hypothec can be taken to secure the borrower's assets in the form of vessels and aircraft. Further, the ICC stipulates that only vessels with a gross weight of 20 cubic metres or more can be encumbered by hypothec. Vessels below this weight may be taken as security under fiduciary security or a pledge.

In general, hypothec is regulated under ICC Articles 1162 to 1232. Under the ICC, hypothec must be made by a deed of hypothec agreement between the creditor and the borrower, and the deed must be registered in the public registry.

Indonesia currently has no unified, specific regulation on shipping or aircraft hypothec. In relation to shipping hypothec, Indonesia's shipping industry is of the view that the lack of a comprehensive law on shipping hypothec raises challenges to realising Indonesia's aim to be a leading country in the maritime industry. Government action is, therefore, sought and urgently needed to improve the regulatory framework, particularly in financing Indonesia's shipping industry.

ii Guarantees and other forms of credit support

Guarantees are commonly used under the Indonesian jurisdiction. Based on ICC Article 1820, a third party (either a personal or corporate guarantor) may guarantee the fulfilment of the borrower's debt to the lender by the consent of such guarantor. A guarantee can be established by a written agreement made by the guarantor and the beneficiary, either in the form of a notarial deed or a private agreement. Indonesian law does not require that the guarantee agreement must be registered for it to be perfected.

It is important to note that the legal capacity to act as a guarantor is subject to the guarantor's incorporation documents (if the guarantor is in the form of a corporation or PT). The guarantor must be permitted by its incorporation documents to act as a guarantor for the other party's (borrower's) debts. The guarantor must also obtain relevant internal approval, if any, as governed under its incorporation documents.

The lenders are, therefore, recommended to check if the requirements mentioned above are satisfied under the relevant incorporation documents. If the requirements are not met, the guarantor would be considered as having no legal capacity to act as a guarantor, and, therefore, the guarantee cannot be enforced against such a guarantor. In this case, the director of the company who acted and conducted the execution of the guarantee agreement on behalf of the company without complying with its incorporation documents would be held personally liable for the guarantee.

Other forms of credit support

Forms of credit support such as quasi-security structures are not common in Indonesia. With respect to enhancing a creditor's protection against a debtor, the parties may enter into any agreements that can bring benefits to supporting the loan transactions, such as indemnity, performance bonds, bank guarantee, standby letter of credit or negative pledge undertakings as a clause in an agreement. Based on ICC Article 1338 stipulating the principle of freedom of contract, parties having legal capacity may enter into an agreement, and such an agreement will apply to the parties as statute (provided that the contract has no illegal purpose or duress). However, the execution of certain agreements as a form of credit support will not be recognised as security rights under Indonesian law, and will only bind the parties as contractual obligations and will not grant preferential rights to debt settlement over other creditors as a security right.

iii Priorities and subordination
Priorities of creditors

Under the ICC, creditors who hold security rights will have a higher rank and are entitled to preferential rights over unsecured creditors. Therefore, creditors who hold security rights over land, fiduciary security, hypothec or pledge will have the highest rank, unless privileged rights are attached to the secured assets, such as unpaid taxes attached to the assets, court charges resulting from the disposal of the assets or legal charges caused by the sale and saving of the assets. Proceeds from the sale of the secured assets must be made available firstly to the party which holds privileged rights, then the remainder shall be made to the secured creditors.

Priorities of competing security interests

Under Indonesian law, the priority of competing security interests will be determined by the time of registration of the security with the relevant public registry or relevant authorities. The first lender to register security rights over the secured assets will hold first priority to the security, and the second lender to register the security rights over the competing secured assets will hold second priority to the security. On enforcement of the security, the lender who holds the first priority will have a preferential right to receive the proceeds of the sale of the secured assets. The remaining proceeds of the sale will be given to the lender holding the second priority ranking.

This priority ranking of competing security interests is only applicable to security over land and hypothec as permissible under the ICC. Other forms of security, such as fiduciary security and pledge, are not applicable for any ranking, as the security asset cannot be granted to more than one holder.

Subordination of debts

Subordination of debts within lenders is possible to be conducted in Indonesia through contractual arrangements. This can be effected through inter-creditor agreements between the lenders and, if required, the borrower. This agreement may set out priority ranking among the lenders over the secured assets.


i Validity and enforceability of lending and securities
Validity of transactions

It should be noted that in doing transactions in Indonesia, the Indonesian Company Law and the articles of incorporation of an Indonesian company normally stipulate certain requirements to obtain corporate approval from the company organs, such as shareholders or the board of commissioners.

Under the Company Law, the board of directors must obtain shareholder approval to encumber the company assets having a value of more than 50 per cent of net assets in one transaction or more, either related or not to each other. The absence of corporate approvals, when it is required, would legally affect the validity of the transaction documents including, in this context, loan agreements, security or guarantee agreements, and they might then become unenforceable. This will cause the directors to be held personally liable for any loss in relation to such provision of the agreement or guarantee/security.

Therefore, it is important for the lenders to take into account the provisions of incorporation documents to make sure any requirement of corporate approvals are satisfied, so the security or guarantee securing the loans would be valid and enforceable. In practice, the lenders would typically require the borrower to provide written confirmation on the fulfilment of such internal corporate requirements.

Enforcement of securities

In the case of a default, securities that grant executorial rights to the security holder can be enforced without a court judgment or court order. However, in practice, for legal certainty in the security enforcement and to avoid any challenges from other parties, a court order would be necessary.

The sale of security assets can be made through public auction. However, a private sale would be permitted in the case that the private sale would generate a higher sale price for the creditor and the owner of the assets has consented to the private sale.

In bankruptcy proceedings, the creditors may enforce security rights against the secured assets as if there were no bankruptcy. In the case of insolvency, the lender is given time to enforce security within two months of the time the borrower is declared insolvent. If the security is not enforced after two months, the curator/receiver of bankruptcy will take over the enforcement of the security.

Financial assistance

In the Indonesian jurisdiction, no prohibitions or restrictions exist on conducting lending arrangements, in particular to provide financial assistance by guarantee or security to secure the loan of a party in connection with the purchase of its shares, its subsidiary or affiliate shares, provided that it is conducted within the law and the articles of incorporation. It must also be conducted with respect to the ultra vires doctrine, whereby the action must be conducted within the purposes and objectives of the company and in the interests of the company. The director's fiduciary duty must also be taken into account by ensuring that all necessary corporate approvals are obtained to enable the director to conduct the transactions.

ii Legal opinions practice

In loan transactions in Indonesia, legal opinions are typically made to the lenders on the legal capacity of the borrower and the validity and enforceability of transaction documents and security interests. The legal opinions are normally addressed and made available only to the lenders, and the disclosure of the opinion is typically limited to the counsel and the lenders.

iii Choice of foreign governing law

Choice of foreign law as the governing law is recognised by Indonesian courts as a valid choice of law in an agreement. In financing agreements, choice of foreign governing law is not permitted for securities or guarantee agreements. These agreements must be governed by Indonesian law in order that they are able to be enforced by Indonesian courts.

Foreign judgments cannot be enforced by Indonesian courts on the basis of territorial sovereignty under the Indonesian Code of Civil Procedure. To be enforced in Indonesia, cases with a foreign judgment must be re-examined at the relevant Indonesian court. The foreign judgments may be treated as evidentiary documents; however, Indonesian courts will not be bound by the findings of the foreign court in the foreign judgments.


Loan trading is commonly effected in Indonesia by an assignment, which under Indonesian law is recognised as cessie. The assignment can be perfected by the acknowledgement of the debtor on the assignment, therefore, binding the debtor to fulfil its obligation to the new creditor who receives the assignment (assignee). The absence of debtor acknowledgement on the assignment will not affect the debtor's obligation to perform its loan repayment to the first creditor, although the assignment agreement has been executed. The debtor is entitled to choose to continue performing its obligation to the first creditor.

The assignment of debt which is secured by security interests, such as security rights over land, fiduciary security or pledges, will include its security to be assigned together with the secured debt. The assignee of the debt would benefit from receiving security rights along with the debt. For the perfection of the security rights, the assignee must notify and register the debt assignment and its security rights with the relevant public registry.


The government of Indonesia is prioritising infrastructure development in Indonesia, but so far it has been dependent merely on the state budget and state-owned enterprises to deliver the projects. This is more than likely to change in the near future, as the government has made efforts by introducing regulatory reforms to establish a more attractive and conducive atmosphere in the coming years for international agencies and private sector finance participants in infrastructure.

1 Sri H Rahayu is managing partner and Indra Prawira is an associate at Rahayu & Partners Law Offices.

2 PWC's annual Indonesian Infrastructure Report 2016.

3 Reuters, ‘Indonesia, China consortium sign $4.5 billion loan for rail project', www.reuters.com/article/us-china-silkroad-indonesia-idUSKCN18B0RX.

4 The Jakarta Post, ‘PLN secures Rp 12t loan from state lenders', www.thejakartapost.com/news/2016/09/10/pln-secures-rp-12t-loan-from-state-lenders.html.

5 OJK press release dated 10 January 2017, ‘OJK Issues Regulation on IT-Based Lending Services', www.ojk.go.id/en/berita-dan-kegiatan/siaran-pers/Pages/Press-Release-OJK-Issues-Regulation-on-IT-Based-Lending-Services.aspx.

6 Law Number 40 of 2007 dated 16 August 2007 on Company Law.

7 Current foreign exchange reference rate of Jakarta Interbank Spot Dollar Rate (JISDOR), US$1 = 13,290 rupiah.

8 Bank Indonesia press release dated 30 October 2014, ‘Bank Indonesia requires Corporate Borrowers of External Debt to enhance Risk Management', www.bi.go.id/en/ruang-media/siaran-pers/Pages/sp_168014.aspx.

9 BI Circular Letter No. 16/24/DKEM dated 30 December 2014 concerning the Implementation of Prudential Principles in Managing Foreign Debt of Non-Bank Corporation.

10 BI Circular Letter No. 18/6/DKEM dated 22 April 2016 on Second Amendment of BI Circular Letter No. 16/24/DKEM.

11 BI Regulation No. 16/22/PBI/2014 dated 3 December 2014 concerning the Reporting of Foreign Exchange Activities and Prudential Principles Implementation Activities in Managing Foreign Debt of Non-Bank Corporations.

12 Article 12, BI Regulation 16.

13 BI Regulation No. 16/22/PBI/2014.

14 Law Number 7 of 1983 concerning Income Tax as lastly amended by Law No. 36 of 2008 on the Fourth Amendment of Law No. 7 of 1983.

15 Government Regulation No. 21 of 2015 dated 6 April 2015 on the Procedures for Registering Fiduciary Security Rights and the Fees for Preparing Fiduciary Transfer Deeds.