The Government has issued new regulations governing the asset management of the Indonesian Investment Agency (the IIA, or in Indonesian, Lembaga Pengelola Investasi).*
The IIA is an institution that is given special authority to manage the assets and investments of the central government to ensure that they are properly administered. The assets managed by the IIA include paid up capital on companies owned by the state, investment returns, assets of state-owned enterprises, grants and/or other legitimate sources of funds including those obtained from debts, loans, bonds and other credit facilities. The IIA manages these assets according to the principles of transparency, accountability and good governance.
The Regulations set out in detail the actions that the IIA is permitted to undertake, which includes:
- managing assets in cooperation with certain third parties;
- establishing and/or investing in managed funds; or
- issuing or receiving loans in the form of credit, debt or other types of loans that meet certain risk analysis criteria.
Further, the Regulations allow the IIA to pledge its assets as collateral or as a guarantor in certain circumstances.
The Regulations list how any profits should be used including for contribution to the IIA’s mandatory reserve. The Regulations also set out the details of when the IIA’s profits may be shared with the government and when the government can increase the IIA’s capital.
According to the Regulations, the IIA can only declare bankruptcy if it meets certain strict requirements including testing carried out by an independent agency appointed by the Minister for Finance.
*Governmental Regulation Number 74 of 2020 concerning the Indonesia Investment Agency. This Regulation was issued in accordance with Law Number 11 of 2020 concerning Job Creation.
