New Regulation On The Possibility Of Ipr Assets As Collaterals

President Joko Widodo on July 12, 2022 has officially enacted Government Regulation no. 24 of 2022 concerning Implementing Regulations (GG 24/2022)for the Law no. 24 of 2019 concerning Creative Economy (Law 24/2019). According to the Indonesian government, as the president himself frequently mentioned in several public addresses following the enactment, one of the highlights from the new government regulation is the fixation the concept of Intellectual Property-based Financing Scheme, which term has been introduced in Article 16 of the Law 24/2019.

According to definition provided by GG 24/2022, IP-based Financing Scheme is a scheme for business financing wherein financing institutions, either bank or non-bank, acknowledges intellectual property as collateral upon which a financing arrangement is provided for a creative economy entity, which is further defined as person either as an individual or jointly as a group, or business entities Both Law 24/2019 and GG 24/2022 defines “creative economy” as “manifestation of added values from intellectual property that is originating from human creativity based upon cultural heritage, science, knowledge, and/or technology”.

Under the new GG, a creative economy entity shall be able to apply for loan under the IP-based Financing Scheme to financial institutions by submitting a financing proposal and meeting other criteria, i.e. having an already running creative economy business, as well as having creative economy products that are tied to certain intellectual property rights as evidenced by registration certificate and/or recordation notice. The source of fund for the IP-based Financing Scheme under this GG itself is coming from government as allocated in the annual budget at either national or regional level, which then later to be distributed through designated financing institutions.

While the ideas as well as proposed concepts for IP-based financing have been around for quite a while, at least since the acknowledgement of IPR as equal to other forms of movable property rights, one of the biggest concerns in the realization of such concepts has been the question of valuation of the IPR asset itself. The GG 24/2022 tries to address this concern by providing guidelines in Article 12 that valuation of an IPR asset can be assessed using either one or combination of approaches based upon cost, market, revenue, as well as other approaches made possible pursuant to applicable laws and regulations. The GG goes even further by introducing a new profession called IPR Value Assessor, who shall be registered in a government ministry responsible for creative economy, after obtaining public valuation license issued by the ministry of finance and having relevant competence in the fields of intellectual property rights.

This however has yet to provide answers to the whole valuation concerns. Chief Commissioners of Otoritas Jasa Keuangan (Financial Services Authority) or OJK, the state institution responsible for supervising financial institutions in Indonesia, Mahendra Siregar, while expressing the commitment of his institution to support government’s initiatives on IP-based financing scheme under GG 24/2022, also admits that there are still several challenges that need to be addressed properly before the scheme can be put into actual implementation. Among others is the highly fluctuating nature of IPR assets value, which is very dependent on many factors such as market sentiment, marketing strategy, trends of public appreciation, time values, as well as economic age of IPR products. The key, according to OJK, is to formulate a more detailed guidelines on valuation, along with strengthening the system and apparatus supporting the arrangement. OJK also suggests that the government also provides further incentives, for example in the form of interests subsidy, so that banking sectors in particular can be more convinced to provide loans based upon IPR assets as collaterals.


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