Foreign Company Bond Issuance in Indonesian Jurisdiction

Short Memo

There are two ways through which corporate bonds are issued in Indonesia, namely through public offering
and without public offering. The issuance through public offering is governed under Law No. 8 of 1995 j.o.
Law No. 1 of 2017 (“Capital Market Law”), whereas issuance without public offering is governed under
the Financial Services Authority Regulation No. 30/POJK.04/2019 (“POJK 30/2019”). Neither authorizes
foreign companies to issue bonds and sell them directly in the Indonesian capital market.

1. Through Public Offering

a. Pursuant to Article 70(1) Capital Market Law, a corporate bond issuer can only offer the
corporate bond, if it has fulfilled the registration statement to the Capital Market
Supervisory Agency (Badan Pengawas Pasar Modal/ “Bapepam”). Pursuant to the Chief
of Bapepam Decree No. KEP-42/PM/2000, the registration statement shall be accompanied
with the tax registration number (Nomor Pokok Wajib Pajak / “NPWP”) of the
commissioner, director and the shareholders. These documents are only subjected to
Indonesian legal entities and Indonesian taxpayers as provided by Article 2 Law No. 6 of
1983 j.o. Law No. 11 of 2020 (“Taxation Law”). NPWP is also required when companies
seek to lodge a registration application to the Indonesia Stock Exchange for their corporate
bonds pursuant to Regulation Number I-B regarding Listing of Debt Securities, Annex of
Indonesia Stock Exchange (“IDX”) Board of Directors Decree Number Kep-
00038/BEI/05-2020 dated 20 May 2020. As such, a Singaporean based company cannot
directly issue a corporate bond directly through public offering in Indonesia because it does
not meet the document requirement.
2. Without Public Offering
a. As regards the issuance of corporate bonds without public offering, Article 6 of POJK
30/2019 requires the issuer of corporate bonds without public offering to be either publicly
listed Indonesian companies or other business entities incorporated under the laws of
Indonesia.

Conclusively, the prevailing regulations in Indonesia do not allow foreign companies to be publicly listed
in the IDX and to issue corporate bonds in the Indonesian capital market. For foreign companies to sell
their bonds in Indonesia, current regulations only allow them to set up an Indonesian subsidiary which shall
then be registered as an issuer in IDX and sell the bonds indirectly; foreign companies may also market
their bonds in Indonesia through the Indonesian Depository Receipt (“Sertifikat Penitipan Efek Indonesia /
IDR”) scheme. Pursuant to Art. 1 (5) j.o. Art. 6 of Financial Services Authority Regulation No.
6/POJK.04/2020, IDR is a form of security publicly offered in IDX that represents ownership of the foreign
company’s securities which are deposited in a custodian bank. Through IDR, the listed issuers will be
Indonesian companies. As such, there are no foreign companies listed in the list of issuers of corporate
bonds in the Indonesian Stock Exchange, since the prevailing regulations do not permit.1

1
https://www.idx.co.id/en-us/market-data/bonds-sukuk-data/corporate-bonds-sukuk/