On 21^st July 2022, the Minister of Law and Human Rights, Mr. Yasonna Laoly, shared some exciting news for a content creator; the Minister stated that content uploaded to YouTube that has gained lots of views could be used as collateral for a loan to a bank.

Such exciting news is backed up by the issuance of Government Regulation Number 24 of 2022 concerning Implementing Regulations of Law Number 24 of 2019 concerning the Creative Economy (“GR 24/2022”), which recognizes the fiscal value of Intellectual Property (“IP”) and allows IP to be used as collateral for loan or financing. Your YouTube videos may fall into the IP category that can be used for loans or financing.

Although GR 24/2022 comes into force 1 (one) year after the date of promulgation, several provisions must be observed by IP right owners before submitting their IP as collateral for loan or financing.

How does an Intellectual Property be Collateral for Loan or Financing? How does it work?

The issuance of GR 24/2022 opens various financing options for creative economy actors. Article 1 Number 1 GR 24/2022 defines creative economy as the embodiment of added value from Intellectual Property originating from human creativity based on cultural heritage, science, and/or technology (“Creative Economy“).

Source of Financing

Creative Economy financing shall be sourced from:

1. State Revenue and Expenditure Budget, which is implemented in accordance with the state’s financial capacity;
2. Regional revenue and expenditure budget, which is implemented in accordance with the region’s financial capacity; and/or
3. Other legitimate sources are not binding and are in accordance with the provisions of the legislation.

Intellectual Property-Based Financing Scheme through Bank and Non-Bank Financial Institutions

The Government facilitates the IP-Based Financing Scheme through bank financial institutions and non-bank financial institutions for Creative Economy Actors. Article 1 Number 2 GR 24/2022 regulates that Creative Economy Actors are individuals or groups of Indonesian citizens or business entities with legal or non-legal entities established under Indonesian law that carry out Creative Economy activities. Facilitation of IP-Based Financing Schemes for Creative Economy Actors is carried out through:

1. Valuable use of the IP economy

The facilities in this section facilitate the application process for the registration or registration of IP in accordance with the provisions of laws and regulations in the field of IP and optimize the use of IP as an object of collateral for loan or financing.

• IP assessment

The facilities in this section are at least in education and training.

IP that can be used as an object of collateral for loan or financing in the form of:

1. IP that has been listed or registered with the ministry that carries out government affairs in the field of law; and
2. IP that has been managed either independently and/or the rights have been transferred to other parties.

Creative Economy Actors propose IP-based financing to bank financial institutions or non-bank financial institutions. The requirements for submitting IP-based financing consist of at least the following:

1. Financing proposals;
2. have a Creative Economy business;
3. have an engagement related to Intellectual Property
4. Creative Economy products; and
5. Have a registration letter or certificate of Intellectual Property.

Bank financial institutions or non-bank financial institutions providing IP-based financing shall:

1. Verification of Creative Economy business;
2. Verification of the registration letter or IP certificate used as collateral which can be executed in the event of a dispute or non-dispute;
3. assessment of IP that is used as collateral;

the assessment is carried out by the IP appraiser and/or appraisal panel. The IP Appraiser referred to must meet the following criteria:

1. have a public appraiser permit from the ministry that administers government affairs in the field of state finance;
2. have competence in the field of Intellectual Property assessment; and
3. registered with the ministry that carries out government duties in the field of the Creative Economy.

The appraisal pane is referred to a group of people appointed by a financial institution.

• Disburse funds to Creative Economy Actors and
• Receipt refunds from Creative Economy Actors according to the agreement.

In implementing the IP-Based Financing Scheme, bank and non-bank financial institutions use IP as an object of collateral for loans or financing. The object of collateral for loan or financing, as referred to, is implemented in the form of:

1. fiduciary guarantee on IP;
2. contracts in Creative Economy activities; and/or
3. collection rights in Creative Economy activities.

In addition, the Government can develop alternative sources of financing outside the mechanism of financing institutions. The alternative financing referred to may be in the form of:

1. information technology-based co-financing services; and/or
2. securities offering through information technology-based crowdfunding services.

To implement letters a and/or b above, Creative Economy Actors must obtain a permit from the Financial Services Authority.

Financing Dispute Settlement

Dispute settlement can be conducted through court or out of court. Settlement of disputes at bank financial institutions from non-bank financial institutions outside the court is carried out by alternative dispute resolution institutions with approval from the Financial Services Authority.

Out-of-court dispute settlement that does not involve bank financial institutions and non-bank financial institutions can be resolved through other dispute resolution institutions.

The dispute settlement institution outside the court, as referred to, is by providing a dispute resolution mechanism online.

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