The debt relief program for the settlement of unpaid patent annuities renewed in Indonesia

From 2021, Indonesia will continue its debt alleviation program, which includes the settlement of overdue patent annuities. The debt relief initiative, which Indonesia has dubbed its “Crash Program,” has been modified to make it more user-friendly and attentive to the concerns of debtors. The Ministry of Finance’s Regulation No. 11/PMK.06/2022 about Settlement of State Receivables through the Crash Program Mechanism, which replaced a related notification from the previous year and was published on February 21, 2022, lays out the new “Crash Program”.

As “state receivables,” patent annuities fall under the Crash Program’s purview. The Directorate General of Intellectual Property (DGIP) reports that as of March 2022, there were IDR 211 billion in unpaid patent annuities (approx. USD 14.5 million). The DGIP thus encourages patent holders to settle their unpaid patent annuities through the Ministry of Finance’s Crash Program.

The following forms of debt relief are available to debtors who owe unpaid patent annuities under the Crash Program:

• Waiver of all the 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 following list summarizes the main features of the Crash Program under the new legislation.

Foreign Debtors

The initial Crash Program legislation from 2021 was vague regarding the prerequisites for international debtors to be eligible to take part in the program. However, the new rule enables foreign debtors to receive a letter of recommendation from their foreign embassy in Indonesia or another approved institution in their place of origin to satisfy the requirements for supporting paperwork in order to take part in the Crash Program. The letter of recommendation must attest that absent debt relief, the debtor is unable to pay the entire amount owed.

Moratorium

The new law no longer permits debt moratoria or legal action to delay payments in the Crash Program because there was minimal demand for them during the program’s execution in 2021. Debt reduction is the only option accessible in the Crash Program under the new rule.

Deadline to File

Compared to the 2021 regulation, the new regulation moves the deadline for submitting a request for debt relief even closer to the end of the year. The deadline to submit a request for debt relief under the 2022 Crash Program is December 15, 2022. (as opposed to December 1, 2021, in the previous program).

Except for petitions submitted between November 21, 2022, and December 15, 2022, in which case the payment deadline is December 20, 2022, the settlement must be made within one month of a request for debt relief being authorized.