IP as Collateral: 4 Potential Challenges

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Last July, as an effort to revitalize and encourage the growth of Indonesia’s creative industry, Government Regulations No.24 Year 2022 on Creative Economy was signed. Among the critical points of this regulation is the creation of a framework that supports the use of IPs as security objects to obtain financing from banks and other financial institutions. This potentially significant development could ignite an array of opportunities, especially for creators.

Article 9 stipulates that in implementing the Intellectual Property-Based Financing Scheme, bank financial institutions and non-bank financial institutions can use IPs as collateral in the form of fiduciary guarantees on Intellectual Property, contracts in Creative Economy activities and /or royalty rights in Creative Economy activities.

It is further explained in Article 10, that IPs that can be used as collateral are IPs that have been registered with the ministry, that carry out government affairs in the field of law and intellectual property, which have been managed either independently and/or the rights have been transferred to a third party. In other words, IPs need to be registered before being utilized as collateral objects.

IPs as collateral is not a new concept in Indonesia. Article 16 paragraph (3) of Law no. 28 of 2014 on Copyright stipulated that copyright can be used as an object of fiduciary guarantee. Likewise with patents, as stipulated in Article 108 Paragraph (1) of Law no. 13 of 2016 on Patents. However, the implementation of the regulation in the legislation has stagnated due to a lack of supporting facilities. Hence the signing of Government Regulation No. 24/2022, as a source of law for various requirements for applying for intellectual property-based financing, including: IP as collateral, IP appraisal professions, IP appraisal methods, and so on.

However, the application of Government Regulation No. 24/2022, of course, cannot escape its challenges. In a press conference held on September 1, the Chief Executive of Banking Supervision of the Financial Services Authority (OJK) Dian Ediana Rae explained a number of these potential challenges, namely:

  1. Fluctuating Values of IP

IPs could be riskier than other collateral objects because they could have drastic fluctuations in value. These fluctuations can be driven by various factors, including the productivity IP object, market trends or tastes, market performance, etc. These can complicate the assessment of IP.

  1. IP’s reputation as a fluctuating industry

Fluctuations in the value of IP not only complicate the assessment. The reputation of the IP industry as a sector with fluctuating productivity and a risk to stability might push banks to provide greater reserves for IP-based collateral.

  1. Market competition

The IP-based industry can be very competitive, making it difficult for small or medium-sized businesses to compete and access capital.

  1. Dependence on Sectoral Policies and Innovation

The portion of investment financed by bank loans for intangible assets is still relatively small, and the amount depends on the policies of the guarantor institution. Such investments are regarded as potentially weakening the channel of monetary policy as they are considered less responsive to changes in interest rates.


Thus, it can be concluded that Government Regulations no. 24/2022, is not free from potential problems, mainly regarding IP valuation. However, the goal of the regulation, namely the establishment of an ecosystem that supports IP-based financing, is a good first step towards realizing one of the main goals of IP protection: rewarding human creativity and by extension, encouraging the growth of creative industries.

If Partners have more questions regarding this matter or anything else related to IP, contact us via marketing@ambadar.co.id



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