Recent developments in Indonesian requirements for reporting on offshore borrowings
23 February 2011
In December 2010 the Indonesian central bank, Bank Indonesia, issued a new regulation setting out reporting obligations on non-bank companies and individuals in relation to their offshore loans. This replaced previous regulations dating back to 2000 and is aimed at promoting successful monetary control. Those in Indonesia engaging in offshore loans should be aware of the requirements and the changes that the new regulation has introduced.
On 29 December 2010 the Indonesian central bank, Bank Indonesia (BI), issued a new regulation on offshore loan reporting obligation with Regulation No. 12/24/PBI/2010 (PBI 12/2010). PBI 12/2010 applies to the requirement for non-bank companies and individuals to report on their offshore loan obligations to BI. It revokes previous BI regulations regarding the same subject matter, namely BI Regulation No. 2/22/PBI/2000 dated 2 October 2000 and its amendment, Regulation No. 11/17/PBI/2009 dated 5 May 2009. PBI 12/2010 has been augmented by Circular Letter No. 13/1/DInt, issued by BI.
The primary objective of BI in introducing PBI 12/2010 is to improve on the previous regulations aimed at promoting successful monetary control by imposing obligations to non-bank companies and individuals to report on their offshore loans to BI. The reports will be used by BI to monitor and manage offshore debt obligations. Some key provisions in PBI 12/2010 to note are:
PBI 12/2010 defines "offshore loans" as all loans received by "residents" from non-residents, which can be denominated in foreign currency or Rupiah. Offshore loans can be based on a loan agreement, debt securities (import letter of credit with bankers' acceptance, bonds, commercial paper, promissory notes, medium term notes, and floating rate notes), trade credits and/or other loans such as insurance claims and unpaid dividends, but excluding government two step loans, demand deposits, savings, and time deposits (Loan Documents). The previous regulations provided amount and tenor thresholds for offshore loans that were subject to reporting requirements. PBI 12/2010 does not provide any such thresholds for offshore loan received by legal entities other than individuals. Therefore, any offshore loan received by such legal entities, regardless of the amount or tenor, will be subject to the reporting obligations. However, for individuals, offshore loan reporting obligations only apply to loans of US$200,000 or more.
"Residents" means any: (a) person; (b) legal entity; or (c) other entity that domiciles or plans to domicile in Indonesia for at least one year, including any offshore representative and diplomatic staff of the Republic of Indonesia.
Offshore Loan Report
PBI 12/2010 applies to any resident (the Borrower) who receives an offshore loan from a non-resident.
The Borrower is required to submit an offshore loan report to BI which shall consist of:
a basic data report (to be amended from time to time) that includes details of: (i) the Borrower's profile; and (ii) offshore loan profile; and
an offshore loan data realisation report, a report submitted regularly through the life of loan giving updates on the status of the loan including amounts outstanding, amounts repaid and interest paid.
Under the previous regulations, the Borrower was required to report on its offshore loan within 10 days from the date of the relevant Loan Documents. PBI 12/2010 now requires the offshore loan to be reported on by the 10th day of the following month after the signing date of the relevant Loan Documents. The Borrower is also required to submit a monthly realisation data report between the 1st and 10th day of each subsequent month.
A Borrower who is late in filing an offshore loan report (either the basic report or the realisation report) will be subject to a penalty of Rp 100,000 (one hundred thousand Rupiah) per day of delay, where the maximum aggregate penalty is set at Rp 10,000,000 (ten million Rupiah). The Borrower is deemed to have failed to submit an offshore loan report if the delay lasts for up to six months from the relevant deadline.
PBI 12/2010 has been effective from the date of its issuance, but the sanctions will only come into effect for offshore loans made from June 2011 and reported from July 2011. Therefore, although all offshore loans are required to comply with PBI 12/2010, they will not be immediately subject to the sanctions for non-compliance until June 2011.
In addition to PBI 12/2011, an Indonesian borrower is also subject to Presidential Decree No. 39 of 1991 regarding Coordination of Offshore Loan Management, Presidential Decree No. 59 of 1972 regarding Receiving Offshore Loans and the Minister of Finance Decree No. KEP. 261 Year 1973, which require it to file offshore loan reports to Tim Pinjaman Komersial Luar Negeri (PKLN) (the Team of Offshore Commercial Loan) and the Minister of Finance.