Investment Loan Agreement Template for Indonesia

An Investment Loan Agreement is a legally binding contract that governs medium to long-term financing arrangements in Indonesia. You'll use this document when securing funding for capital investments, business expansion, or major project development. The agreement establishes the rights and obligations of both lender and borrower while ensuring compliance with Indonesian banking and investment regulations.

When do you need this document?

You need an Investment Loan Agreement when your business requires substantial funding for capital expenditure projects, equipment purchases, or facility expansion. Manufacturing companies often use these agreements to finance new production lines or technology upgrades. Property developers require investment loans for construction projects and infrastructure development. Foreign investors use these agreements when establishing operations in Indonesia, particularly when compliance with the Investment Law No. 25 of 2007 is required. Banks and financial institutions also rely on these agreements for syndicated lending arrangements where multiple lenders participate in large-scale financing.

Key legal considerations

Your Investment Loan Agreement must include comprehensive security arrangements, often involving both personal and corporate guarantees. Collateral provisions typically reference fiduciary security under Law No. 42 of 1999 for movable assets and land mortgages under Law No. 4 of 1996 for real property. You should carefully structure the conditions precedent to protect the lender's interests while ensuring achievable milestones for drawdown. Interest rate provisions must comply with Indonesian banking regulations and may include variable rate mechanisms tied to Bank Indonesia reference rates. Default and enforcement clauses require specific attention to Indonesian court procedures and debt recovery mechanisms. Cross-default provisions should be tailored to Indonesian legal concepts and may differ from international standards.

Legal requirements in Indonesia

Indonesian law mandates that investment loan agreements exceeding certain thresholds must be executed before a notary public and registered with relevant authorities. Banking Law No. 10 of 1998 requires specific disclosures and consumer protection provisions for certain types of borrowers. Foreign lenders must comply with central bank regulations under Bank Indonesia, including reporting requirements and foreign exchange provisions. The agreement must be drafted in Indonesian language for domestic transactions, though bilingual versions are permitted for international arrangements. Investment loans supporting foreign direct investment must align with the Negative Investment List and obtain necessary approvals from the Investment Coordinating Board (BKPM). Security arrangements require registration with appropriate Indonesian registries, and enforcement procedures must follow Indonesian civil procedure law.