Financing Institutions

​​​Financing Institutions

A Financing Institution is a business entity that conducts financing activities in the form of providing funds or capital goods.

Financing Institutions include Financing Companies and Infrastructure Financing Companies.

Financing Company

Definition

1. Financing Company is a business entity that engages in the activity of financing goods and/or services.

2. Sharia Financing Company is a Financing Company whose entire business activities are focused on providing Sharia-compliant financing.

3. Sharia Business Unit, hereafter abbreviated as UUS (Unit Usaha Syariah), is a division of the head office of a Financing Company that carries out Sharia Financing and/or functions as the main office for branches that implement Sharia Financing.
   
   

Types of Business Activities

The business activities of a Financing Company include:

1. Investment Financing;
   Investment Financing is the financing of capital goods along with the services necessary for business/investment activities, rehabilitation, modernization, expansion, or relocation of business/investment locations provided to the debtor.

2. Working Capital Financing;
   Working Capital Financing is financing to meet the expenditure needs that are used up in one cycle of the debtor's business activities.

3. Multipurpose Financing; and/or
   Multipurpose Financing is financing for goods and/or services required by the debtor for personal use/consumption and not for business or productive activities, for an agreed period.

4. other financing activities based on the approval of the Financial Services Authority.​
   

In addition, a financing company may engage in business activities based on Sharia principles. Sharia Financing is the provision of financing conducted in accordance with Sharia principles, provided by a Sharia-compliant company.

Sharia Financing includes:

• Sale and Purchase Financing;
  Sale and Purchase Financing is financing in the form of providing goods through sale and purchase transactions in accordance with the Sharia Financing Agreement agreed upon by the parties.

• Investment Financing; and/or
  Investment Financing is financing in the form of providing capital for a specific period for productive business activities, with profit-sharing in accordance with the Sharia Financing Agreement agreed upon by the parties.

• Service Financing.
  Service Financing is the provision of services, either in the form of benefits from goods, loan provision, and/or service provision with or without payment for service fees in accordance with the Sharia Financing Agreement agreed upon by the parties.

Infrastructure Financing Company

Definition

Infrastructure Financing Company, that is a business entity that is founded particularly to provide financing in the form of funding for infrastructure projects.

Business Activities

1. Direct lending for infrastructure financing;

2. Refinancing of infrastructure that has been financed by other parties;

3. Provision of subordinated financing related to infrastructure financing;

4. Activities or provision of other facilities related to infrastructure financing after obtaining approval from the Financial Services Authority (Otoritas Jasa Keuangan); and/or

5. Activities or provision of other facilities unrelated to infrastructure financing based on government assignment.​
   

In addition to conducting the business activities as described above, the Infrastructure Financing Company may also carry out:

1. Providing credit support;

2. roviding consultancy services;

3. Equity participation; and/or

4. finding a swap market related to infrastructure financing
   
   

Types of Infrastructure

The infrastructure that is the object of infrastructure financing includes:

1. Transportation infrastructure;

2. Road infrastructure;

3. Water resources and irrigation infrastructure;
   

4. Drinking water infrastructure;

5. Centralized wastewater management system infrastructure;

6. Localized wastewater management system infrastructure;

7. Waste management system infrastructure;

8. Telecommunications and informatics infrastructure;

9. Electrical infrastructure;

10. Oil and natural gas infrastructure and renewable energy;

11. Energy conservation infrastructure;

12. Urban facility infrastructure;

13. Educational facility infrastructure;

14. Sports and arts facility infrastructure;

15. Regional infrastructure;

16. Tourism infrastructure;

17. Healthcare infrastructure;

18. Correctional facility infrastructure;

19. Housing infrastructure for the people;

20. Government building infrastructure; and

21. Other infrastructure not included in letters a to t, which must first obtain approval from the Financial Services Authority.
    
    

Prohibitions

The Infrastructure Financing Company is prohibited from:

1. Raising funds directly from the public in the form of current accounts, savings, and/or other forms similar to public fund collection; and/or

2. Issuing promissory notes, except as collateral for the issuance of bonds to its creditors.​