What are the requirements that I must fulfill as an Indonesian citizen to receive loans from foreign creditors?
DAFTAR ISI
INTISARI JAWABAN
In principle, an individual Indonesian Citizen as a Foreign Debtor can receive a loan from a Foreign Creditor if the Indonesian Citizen has fulfilled the conditions, among others:
legal capacity to perform an agreement as stipulated in the Civil Code;
the agreed loan/credit agreement has fulfilled the essential elements in the Civil Code and BI Regulation 17/23/2015; and
carry out obligations related to Foreign Exchange Traffic activities.
How is the full explanation?
Please read the review below for a further explanation.
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According to your question, we can assume that you are an individual Indonesian Citizen (Warga Negara Indonesia/ "WNI") who is domiciled in Indonesia and will receive a loan from a foreign creditor through an agreement or a loan agreement. Before discussing further about the requirements for individual Indonesian citizens to receive a foreign loan, we will first explain what an Offshore Loan is, and who are the parties that can receive and provide it.
Offshore Loans (Utang Luar Negeri), from this point onwards, is referred to as ULN, are loans of residents to non-residents in foreign currencies.[1] Furthermore, the definition of resident contained in the definition of ULN is a person, legal entity or other entity, who is domiciled or plans to be domiciled in Indonesia for at least 1 year, including representatives and diplomatic staff of the Republic of Indonesia abroad.[2] Furthermore, according to Article 1 number 18 BI Regulation 16/10/2014, it is explained that Debtors of Offshore Loans (Debitur Utang Luar Negeri), from this point onwards is referred to as ULN Debtors, are individuals, non-bank legal entities, and other entities that have ULN. Continuing your question, it can be concluded that you as an individual Indonesian Citizen who will receive ULN can be called an ULN Debtor.
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Definition of Foreign Exchange and Foreign Exchanged Sourced from Offshore Loans
After knowing what Offshore Loans or ULN is, it is necessary to discuss the definition of foreign exchange and its relationship with Foreign Exchanged Sourced from Offshore Loans (Devisa Utang Luar Negeri/ “DULN”). According to Article 1 number 2 Law 24/1999, foreign exchange is financial assets and liabilities used in international transactions. Furthermore, foreign exchange earned by a ULN Debtor from the withdrawal of ULN is referred to as DULN.[3] Thus, it can be argued that you as ULN Debtor who will later receive or withdraw ULN through the Loan Agreement mechanism can be said to be a ULD Debtor who receives DULN.
Then, based on the definition of ULN and the definition of resident, it can be assumed that the party that can provide ULN to you as a ULN Debtor is a non-resident party, namely a person, legal entity, or other entity, which is not domiciled or does not plan to be domiciled in Indonesia for at least 1 year, including those that are not diplomatic representatives of the Republic of Indonesia abroad or can be referred to as foreign creditors. Thus, non-resident parties who provide ULN to you as a ULN Debtor in foreign currency which will later be withdrawn by ULN Debtors in the form of DULN can be assumed to be overseas creditors or foreign creditors.
Requirement of Legal Capacity in Civil Code
In BI Regulation 16/10/2014 and its amendments, provisions have been regulated for ULN Debtors to receive ULN from foreign creditors. However, these provisions do not regulate the guidelines for individual Indonesian Citizens to enter into an agreement, in this case, a Loan Agreement. Therefore, you can pay attention to the provisions in the Civil Code before you make a Loan Agreement to receive ULN.
Basically, in Article 1329 Civil Code, every person is authorized to make an agreement, unless he is declared incapable of doing so. However, you must ensure that you are not included in the qualifications of people who are incapable of making agreements, namely minors and people placed under guardianship as stipulated in Article 1330 Civil Code. Here's an explanation of each.
Adult to Perform Obligations
Article 330 Civil Code explains that minors are those who have not reached the age of 21 years, and who have not previously been married. Furthermore, based on the Appendix of Supreme Court Circular Letter 4/2016 on the Formulation of Civil Chamber Law (p. 3), the limitation of the age of maturity must be seen based on the context of the case concerned (casuistic), so that in this case, the age of majority to enter into an agreement or Loan Agreement is 21 years old as stated in the Civil Code.
Not Under Guardianship
The specific provisions regarding persons placed under guardianship are further regulated in Article 433 Civil Code which stipulates that every adult, who is always in a state of imbecility, insanity, or dark eyes, must be placed under guardianship, even though he is sometimes capable of using his mind. An adult may also be placed under guardianship due to extravagance.
Essential Elements of Loan Agreement in Civil Code and Bank Indonesia Regulation
After you fulfill the requirements for making a Loan Agreement as stipulated in the Civil Code, you must also pay attention to the essential requirements in an agreement. Basically, in a loan and borrowing agreement there are essential elements, where without these elements, the loan and borrowing agreement is considered to have never existed.[4] Then in principle, the Loan Agreement is a loan and borrowing agreement as regulated in Article 1754 jo. Article 1756 jo. Article 1759 Civil Code, which in our opinion can be concluded that a loan and borrowing agreement is an agreement in which the lender will hand over an item and/or money to the loan recipient, with the condition that the loan recipient will return the item and/or money to the lender in the same amount and condition at the time specified in the agreement.
Based on the provisions of Article 1754 jo. Article 1756 jo. Article 1759 Civil Code as explained above, the essential elements in a loan and borrowing agreement are:
the existence of goods and/or money;
the goods and/or money must be handed over by the lender to the recipient of the loan;
there is a loan period; and
the goods and/or money must be returned in the same amount and condition by the recipient of the loan to the lender.
Continuing the discussion of essential elements in a loan agreement in the Civil Code, in BI Regulation 17/23/2015, the essential elements that must be contained in the Loan Agreement include regulating the amount of the credit ceiling, interest rate, time period, and settlement methods.[5]
ULN Acceptance Mechanism
Then, Article 13 section (1) BI Regulation 17/23/2015 regulates the mechanism for receiving ULN in the form of DULN for individual Indonesian Citizens as ULN Debtors, as follows:
Any withdrawals of DULN must be received by ULN Debtors through Foreign Exchange Banks, namely a bank that has secured approval from the authorized institution to be able to conduct banking business activities in foreign currencies, including branch offices of foreign banks in Indonesia, but excluding foreign branch offices of Banks whose headquarters are located in Indonesia.[6]
ULN Debtors that receive DULN must submit information on the receiving of DULN to the Foreign Exchange Banks accurately.
The DULN that is received by ULN Debtors must be reported by ULN Debtors to Bank Indonesia.
The above obligations apply to DULN in the form of funds originating from:[7]
ULN based on a loan agreement in the form of non-revolving;
ULN based on debt securities
As an information, a loan agreement in the form of non-revolving is a loan agreement that does not allow the accumulation of ULN withdrawals exceeding the commitment.[8]
Thus, it can be concluded that after the ULN Debtor has agreed on the ULN through the Loan Agreement mechanism as explained above, the DULN withdrawal received by you as the ULN Debtor from the foreign creditor must be made through a Foreign Exchange Bank.
Obligations of Indonesian Citizens and/or ULN Debtors in ULN Management
It is important to know that when you as ULN Debtor receive DULN from an overseas creditor, you must fulfill obligations related to Foreign Exchange Traffic. Summarized from Companies Want to Get Funding from Abroad? Here Are the Requirements, Foreign Exchange Traffic is the movement of financial assets and liabilities between residents and non-residents including the movement of foreign financial assets and liabilities between residents.[9] Based on this definition, the ULN that you will receive from foreign creditors is part of Foreign Exchange Traffic. Therefore, you as a party conducting Foreign Exchange Traffic activities must fulfill the requirements related to Foreign Exchange Traffic.
Then, it should be understood that if you as a ULN Debtor violate the obligations related to the withdrawal of DULN through a foreign exchange bank as referred to in Article 13 section (1) BI Regulation 17/23/2015, you shall be subject to an administrative sanction in the form of fines of 0.25% of each value of the ULN withdrawal which is not received through a Foreign Exchange Bank, with a maximum nominal of IDR 50 million.[10]
In addition to being subject to an administrative sanction in the form of a fine, ULN Debtors that violate the obligations may also be subject to administrative sanctions in the form of written reprimand and notification to the relevant creditor abroad, and/or the authorized agency.[11]
These are the answers we can provide, we hope you will find them useful.
