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June 21, 2022

Indonesia Renews Debt Relief Program for Settlement of Unpaid Patent Annuities

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Indonesia has issued a continuation of its debt relief program—which covers settlement of unpaid patent annuities—from 2021. The debt relief program, which Indonesia has named its “Crash Program,”  has been adjusted to make it more practical for debtors and responsive to their needs. The updated “Crash Program” is laid out in the Ministry of Finance’s Regulation No. 11/PMK.06/2022 regarding Settlement of State Receivables through the Crash Program Mechanism, which was issued on February 21, 2022, replacing a similar notification from the previous year.

Patent annuities are “state receivables” and thus are an object of the Crash Program. According to the Directorate General of Intellectual Property (DGIP), as of March 2022, outstanding unpaid patent annuities due amounted to IDR 211 billion (approx. USD 14.5 million). The DGIP is thus promoting the Ministry of Finance’s Crash Program as a way for patent holders to pay their unpaid patent annuities.

Under the Crash Program, debtors owing unpaid patent annuities can request the following types of debt relief:

  • Waiver of all of debt interest, penalties, and other charges;
  • 60% off debt principal; and
  • From the remaining principal amount, additional deductions of:
    • 40% if settled by June 2022;
    • 30% if settled from July to September 2022;
    • 20% if settled from July to December 20, 2022.

The key aspects of the Crash Program under the new regulation are outlined below.

Foreign Debtors

The original Crash Program regulation from 2021 lacked specific information on requirements for foreign debtors to participate in the program. The new regulation, however, allows foreign debtors to obtain a letter of reference from their foreign consulate in Indonesia or authorized institution in the country of origin to fulfill requirements for supporting documentation in order to participate in the Crash Program. The letter of reference must confirm the debtor’s inability to pay the debt in full unless debt relief is provided.

Moratorium

As there was little interest in debt moratoriums during the execution of the program in 2021, the new regulation no longer includes moratoriums or legal action to postpone payment in the Crash Program. Under the new regulation, debt relief is the only mechanism available in the Crash Program.

Deadline to File

The new regulation pushes the deadline to file a request for debt relief even closer to the end of the year compared to the 2021 regulation. For the 2022 Crash Program, the deadline to file a request for debt relief is December 15, 2022 (as opposed to December 1, 2021 in the previous program).

Once a request for debt relief is approved, settlement must be made within one month, except for requests that are filed from November 21 to December 15, 2022, in which case the payment deadline is December 20, 2022.

For more information on payment of patent annuities, please contact Tilleke & Gibbins at [email protected].

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