Intellectual Property – The clever way to finance in the Indonesian Marketplace

A recent regulation in Indonesia, allowing businesses and people to use their intellectual property assets for collateral against loans, is the GR 24/2022. It’s the hope of the Indonesian government that more players in the business world can access easy financing in this way. So far, in Indonesian industry, the stringent basis on which loans are given has hampered the potential of new businesses to take shape. The new rule will be in effect from the middle of 2023, and hopefully, an expansion of business will occur in Indonesia after then.

Financing and the Creative Economy

The new rule of financing is the Indonesian government’s bid to support the evolution of business in the creative economy of Indonesia. By using  intellectual property to finance businesses, Indonesians have more opportunities to partake in business activities and contribute to the growing economy as a whole. The rule allows the IP assets to be used for loans from banking and non-banking financial corporations. It is the prediction of the government that this rule will enhance more products of a value-added nature to be included in the sector. In 2021, the creative economy of Indonesia contributed nearly 7% of the Indonesian GDP. The growth in the sector continues with e-commerce and consumer behavior that pegs leisure against goods. 

Tapping a Nascent Segment Via IP (Intellectual Property)

  • Several businesses in the creative economy of Indonesia are micro, mid-size or small. These have a huge segment of untapped potential as they lack financing to expand. Some even lack the initial financing to establish themselves in terms of technology and equipment, as well as staff required. The expansion of these businesses that have robust prospects are curbed in their growth and development due to monetary deficits. Additionally, the owners of such small businesses are ignorant of their IP entitlements and rights. Being aware of these could help such businesses realise their value. 

The Sub-sectors in Indonesia’s Creative Economy

In Indonesia, there are seventeen subgroups that are part of the creative economy. These include product design businesses, architectural firms, interior design firms, photography businesses, businesses in the small music industry, animation and video companies. They also constitute food companies and businesses that deal with performing arts, fine arts and advertising. Technically, since these are businesses that do not form direct connections with the demands of daily living, they have taken a backseat where the growth of the economy is concerned. This is simply due to the fact that they face monetary obstacles and some are even forced to shut. 

Financing Through Intellectual Property

In the event that individuals require financing through the new rules determined by collateral against intellectual property, they must be eligible for the same. While they apply for financing, the following criteria must be met: 

  • Provide a financing proposal
  • Operate and manage a business within the creative economy
  • Be in an arrangement linked to the intellectual property asset used as collateral for obtaining financing
  • Have proof of certification of the intellectual property

The Expansion of Business – The Expansion of the Economy

Indonesia is fast becoming a place where business is booming, and this is causing the government to take steps to ensure positive forward momentum within its economic development. With aims to take local and international businesses to new heights, the government is making new regulations to enhance business opportunities from within and without this small island group. With regard to easing financing for small businesses, Indonesia may be taking leaps of faith, but these contribute to a solid GDP for the nation. They also compel international business players to enter businesses in Indonesia, opening the gates of connections on the global stage. If you want your business to grow in Indonesia, the Seamless team can help. Contact us below for more.