Getting to know 'Creative Economy'
GR 24/2022 introduces the concept of Creative Economy, which it defines as the manifestation of added value of IP deriving out of human creativity with culture, knowledge and/or technological basis. The Creative Economy concept closely involves Creative Economy actors which are individuals or groups of Indonesian citizens, or business entities established in the Republic of Indonesia to conduct Creative Economy activities ("Creative Economy Actors").
Creative Economy-Based Financing
Under the scope of GR 24/2022, sources of financing for Creative Economy are from the state budget, local government budget and/or other eligible sources. The Creative Economy Actors may propose to receive financing from banks or non-bank financial institutions with an IP-based financing scheme, in which an IP will be encumbered as a security for securing the financing of the Creative Economy Actors. Creative economy-based financing involves several things to consider as follows:
A. Requirements for creative economy-based financing
Creative Economy Actors who wish to receive creative economy-based financing would be required to (i) have a financing proposal, (ii) conduct Creative Economy business, (iii) have agreements or any arrangements of IP products and (iv) have IP certificates or registration.
B. Objects of creative economy-based financing
GR 24/2022 acknowledges that an IP may be taken as security by way of:
- fiducia security over IP. We note that the concept of fiducia over IP itself is not exactly a new concept since Law No. 28 of 2014 on Copyright and Law No. 13 of 2016 on Patent both already stipulate that copyrights and patents can be the object of a fiducia security.
- contracts/agreements in Creative Economy activities, which includes contracts such as licensing contracts, or work instruction letter to the Creative Economy Actors - rights over contracts/agreements can be secured by way of assignment for security purpose
- rights of receivables from Creative Economy activities, which includes rights to receive royalties deriving from the use of IP. Security over the rights of receivables may also be encumbered by way of fiducia security
IP objects that could be encumbered are IP that (i) have been recorded or registered in the Directorate General of Intellectual Property and (ii) have been managed commercially by its holder or by any third party by way of an agreement.
C. Steps to take for lenders of creative economy-based financing
Banks or non-bank financial institutions who will provide a creative economy-based financing, other than disbursing and receiving repayments of the facilities, they will need to:
- verify the Creative Economy business of the Creative Economy Actors
- verify the recordal letter or registration certificate of IP that will be the object of security for the creative economy-based financing; and
- do an appraisal of the IP that will be the object of security for the creative economy-based financing
Appraisal of an IP object could be conducted by a panel of appraisers which could be a credit appraiser and/or an expert appointed by the financial institution. GR 24/2022 also requires the Ministry of Law and Human Rights to establish a public database of encumbered IP assets. This would be one of the important developments since before the issuance of GR 24, the records on encumbered IP assets (in practice, these are mostly trademarks) are managed by the Fiducia Office.
D. Reporting requirements
Creative Economy Actors should register and report their creative economy-based financing in the registration system for Creative Economy financing, maintained by the Ministry of Tourism and Creative Economy. It remains to be seen when the reporting would take place, i.e., whether it will be a pre-notification or post-notification, and the timeline of when it should be reported.
What to expect
GR 24/2022 will be effective one year after the enactment of the regulation, i.e., 12 July 2023. We expect that there will be further implementing regulations to further elaborate on details such as timeline of reporting of creative economy-based financing, and regulations for alternative financing.
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