By: Deystia Ayesha Rae
In order to support the national economic recovery program as mandated in Article 19 (2) of Government Regulation No. 23/2020 as amended by Government Regulation No. 43/2020 concerning the Execution of the National Economic Recovery program in the Event of Supporting State Financial Policies in Mitigating the Corona Virus Disease 2019 (COVID-19) Pandemic and/or Other Threats to the National Economy and/or Stability of the Financial Systems as Well as in Saving the National Economy (“GR 43/2020”), on 28 July 2020 the Ministry of Finance has issued Ministry of Finance Regulation No. 98/PMK.08/2020 concerning the Procedures of Government Guarantee for Corporate Business Actors Through the Appointed Guarantors in Carrying Out the National Economic Recovery Program (“MoFR 98/2020”), which came into effect on the same day.
The background for the issuance of MoFR 98/2020 is to protect, maintain, and enhance the economic capacity of the business actor in carrying out the business activities, namely by providing government guarantees for working capital loans between Rp10.000.0000.000 (Ten Billion Rupiah) to Rp1.000.000.000.000 (One Trillion Rupiah), which covers loan arrears and/or loan interest, by considering the following principles:
- State financial capacity;
- Support to business actor;
- Prudent application of policy principles, as well as good and transparent governance;
- Does not create moral hazard; and
- Sharing of costs and risks among stakeholders according to their respective duties and authorities.
Pursuant to Article 6 of MoFR 98/2020, in the implementation of government guarantees, the Minister of Finance of the Republic of Indonesia (“MoF”) appoints the Indonesia Export Financing Institutions (Lembaga Pembiayaan Ekspor Indonesia or “LPEI”) alone or alongside with PT Penjaminan Infrastruktur Indonesia (“PT PII”) to act as a guarantor. In this case, PT PII will only act as a guarantor alongside LPEI on this following event:
- The business actor is among the criteria in which LPEI cannot guarantee independently; and/or
- LPEI’s guarantee capacity is close to the maximum limit in accordance with statutory regulations.
In other words, according to MoFR 98/2020, LPEI shall act as a guarantor, while the business actor as the borrower shall act as the guaranteed, and bank as the lender shall act as the guarantee recipient. In performing its duties as a guarantor, pursuant to Article 10 and 17 of MoFR 98/2020, LPEI is entitled to receive Guarantee Fee (Imbal Jasa Penjaminan or “IJP”) from MoF using funds allocated from State Revenues and Expenditures Budget (Anggaran Pendapatan Belanja Negara or “APBN”).
To be a participant under this program, pursuant to Appendix I Letter A Number 2 of MOFR 98/2020, the business actor shall meet some of the following conditions:
- The business actor who carry out business activities which generate foreign exchange, save domestic foreign exchange, increase national production capacity, and/or have at least 300 (three hundred) employees;
- In the form of corporate body;
- Are an existing debtors and/or new debtors of the guarantee recipient;
- Not included in the national blacklist; and
- Has a current performing loan (collectability 1 or collectability 2) as of 29 February 2020.
Furthermore, in the event of default by the business actor as the borrower, pursuant to Article 22 of MoFR 98/2020, for claim payments made by LPEI as guarantor to the bank as guaranteed shall be counted as LPEI’s receivables to business actor.