Court decision creates more financing uncertainty in Indonesia

By Staff reporter / March 05, 2020 / www.mining-journal.com / Article Link

Bill Sullivan, senior foreign counsel at Jakarta-based law firm Christian Teo & Partners and a senior adviser to Stephenson Harwood LLP, said the new challenge was in the form of increased uncertainty about the practical enforceability of a traditionally favoured security right of lenders, the Fiducia Charge.

He said the Constitutional Court had recently ruled a creditor was not entitled to repossess and sell a car, without first obtaining a court judgement.

"Given its lack of clarity, the CC decision is open to different interpretations of varying concern to lenders," Sullivan said.

"Increased uncertainty about the practical enforceability of the Fiducia Charge is also singularly unhelpful for the government as it seeks to improve the ease of doing business in Indonesia and thereby attract more foreign investment."

He said the ability to readily enforce contracts was "a non-negotiable requirement" if Indonesia was to ever realise its economic potential.

"Obtaining financing for businesses and projects in Indonesia has never been easy given the widely-held perception of Indonesia as a high-risk jurisdiction for lenders, especially foreign lenders," he said.

"This has often been particularly the case in capital intensive industries such as mining.

"Regardless of how it is ultimately interpreted and applied, however, the CC decision will certainly do nothing to improve lenders' risk perceptions of Indonesia."

Indonesia ranked 27th out of 76 jurisdictions in terms of investment attractiveness in the Fraser Institute's latest annual survey of mining companies, which was topped by Western Australia.

However the country was in the bottom 10 in terms of hard risk, perceived risk and investment risk in the more comprehensive Mining Journal World Risk Report 2019 (feat. MineHutte ratings).

 

Recent News

Many new players enter TSXV gold Top 25 by market cap

July 14, 2025 / www.canadianminingreport.com

Gold stocks mixed on moderate metal gain, flat equities

July 14, 2025 / www.canadianminingreport.com

Gold stocks lead the large cap miners by far over H1/25

July 07, 2025 / www.canadianminingreport.com

Gold stocks up as the metal price and equities gain

July 07, 2025 / www.canadianminingreport.com

Mixed outlook for gold as it remains range bound for past three months

June 30, 2025 / www.canadianminingreport.com
See all >
Share to Youtube Share to Facebook Facebook Share to Linkedin Share to Twitter Twitter Share to Tiktok