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The Committee of State Receivables Management or Panitia Urusan Piutang Negara (“PUPN”) is an interdepartmental committee that handles and manages the state receivables whose members include the representatives from the ministry of finance, the police the prosecutor and the regional government.

The PUPN is under the Directorate General of State Assets Management of the Ministry of Finance of the Republic of Indonesia. The PUPN activities are conducted at the operational regional offices of the state assets and auction service office or kantor pelayanan kekayaan negara dan lelang (“KPKNL”) which currently have more than 70 offices scattered across various regions in Indonesia.

Considering a large amount of uncollectable state’s bad debt, the role of PUPN is strengthened and the settlement of state receivables is made to be more effective in Government Regulation No. 28 of 2022 regarding Management of State Receivables by the Committee of State Receivables Management (“GR No. 28/2022“), where the PUPN may issue a Distress Warrant, Seizure Order, Seized Assets Auction Order, Auction, Imprisonment for Civil Debt, Overseas Travel Ban, Temporarily Uncollectible Receivables, and others.

Definition of State Receivables

Based on Article 1 of Law No. 1 of 2004 regarding State Treasury, the State Receivables are the amount of money that must be paid to the Central Government and/or the rights of Central Government which can be valued in money as a consequence of agreement or other consequences based on the applicable laws and regulations or from other legitimate causes.

Furthermore, Article 1 of GR No. 28/2022 explains that State Receivables are the amount of money that must be paid to the state based on regulation, agreement or any other reason.

Background 

Article 8 of Government Regulation in Lieu of Law No. 49 of 1960 regarding Committee of State Receivables Management (“GR in Lieu of Law No. 49/1960”) states that the state receivables are the amount of money that must be paid to the State or Agencies which either directly or indirectly controlled by the State based on a Regulation, agreement or any other reason. Further the elucidation of the aforementioned Article 8 explains that state receivables also include receivables from “entities, which in general, their wealth and capital partially or entirely belong to the State, for example State banks, State Limited Liability Companies, State Companies, Provision and Reserve Foundation, Foundation of Food Material Affairs and others”. Furthermore, the GR in Lieu of Law No. 49/1960 also requires the Government institutions and state agencies, as mentioned in Article 8 above, to transfer to PUPN the receivables which existence and amount are certain according to the law but the relevant debt guarantors does not repay properly. The phrase “entities which either directly or indirectly controlled by the State” in the aforementioned article thus grants the authority to State-Owned Enterprise (“SOE“) to transfer the collection of their receivables to PUPN, which at that time SOE was regulated in the form of Service Company (Perjan), Public Company (Perum) and State Company in the form of Limited Liability Company (Persero).

In 2003, the government issued Law No. 19 of 2003 regarding State-Owned Enterprise as lastly amended by Law Number 6 of 2023 regarding Stipulation of Government Regulation in Lieu of Law No. 2 of 2022 regarding Job Creation into Law (“SOE Law“). State-Owned Enterprise is a business entity which its capital is entirely or largely owned by the state through direct participation which derives from the separated state assets. Meanwhile the separated state assets are separated state assets which derive from the State Budget, to be used as state capital participation in Persero and/or Perum and other limited liability companies. State equity participation in terms of establishing or participating in the SOE derives from; the State Revenue, the Capitalization of reserve, and other Sources. The aforementioned matter is as regulated under Article 1 paragraph 1 in conjunction with Article 1 paragraph 10 in conjunction with Article 4 of SOE Law.

According to the provisions of Article 1 paragraph (1) in conjunction with Article 4 paragraph (1) of SOE Law thereof, there is separation between the SOE assets and state assets. The meaning of such separation is in accordance with the elucidation of Article 4 paragraph (1), the separation of assets from the state assets to be used as state equity participation in the SOE so that its guidance and management are no longer based on the state assets system, but its guidance and management are based on the principles of good corporate governance. Based on the provision of article thereof, it appears that by separating it from the state assets thus the state equity/wealth becomes separated from its relationship with the state assets, therefore when the assets thereof are deposited/paid up to the SOE create consequences, namely the transfer of ownership rights to become the SOE assets. Those assets are no longer under the control of the state. This matter may be interpreted that the SOE as a legal entity has its own assets which are separate from the assets of its founder and administrators. Before the government separated the state assets in terms of the SOE participation, the assets thereof still have the status of public assets, because prior to the occurrence of equity participation, the state still has the status of public legal entity which complies with the public law. However, after the establishment of SOE, the state position as a public legal entity immediately transforms into a private legal entity, namely conducting the establishment of SOE legal entity, thus the transformation occurs from public money into to private money.

In the period after the issuance of the SOE Law, there was confusion on the authority of PUPN in conducting the management of State Receivables which derived from the government institution and business entity which either directly or indirectly controlled by the state based on a regulation, agreement or any other reason. As previously described above, based on Article 8 of Government Regulation in Lieu of Law 49/1960 including the elucidation of such Article emphasizes that the definition of state receivables mean the amount of money that must be paid to the State or Agencies which either directly or indirectly controlled by the State, including the SOE. However, on the other hand after the issuance of the SOE Law then conveyed that in the SOE there was separation of state assets from the SA to be used as state equity participation in the SOE so that it might be interpreted that the SOE as legal entity had its own assets which separated from the state assets.

In 2012 the Constitutional Court through the Constitutional Court Decision Number 77/PUU-IX/2011 dated 17 September 2012 (“CC Decision 77/2011“) in the name of law declared the phrases of “agencies that either directly or indirectly controlled by the State” in Article 8 of Government Regulation in Lieu of Law 49/1960 was contrary to the 1945 Constitution of the Republic of Indonesia so it has no legal force. As for the consideration of the Panel of Judges of the Constitutional Court in declaring the CC Decision 77/2011 was due to the past enactment of Law Number 1 of 2004 regarding State-Owned Enterprise and Law Number 40 of 2007 regarding Limited Liability Company the SOE receivables should be enabled to be settled by its management respectively as a limited liability company which assets duly separated from the state assets which in conducting its entire business including the management and administration of receivables of each SOE respectively conducted by the management of the respective SOE and not delegated to the PUPN. The implication of CC Decision 77/2011 is that SOE cannot delegate the collection of its receivables to the PUPN anymore.

According to the Minister of Finance Regulation Number 240/PMK.06/2016 (“MFR No. 240/2016”) regarding State Receivables Management of, the PUPN still has the authority in collecting the SOE receivables, but restricted that the SOE/Regional-owned Enterprise can assign the management of its receivables to the PUPN in terms of the SOE/Regional-owned Enterprise duly transferred the fund which derives from the Government Institution through the following pattern:

1. lending (channeling) namely the pattern of channeling the fund by the government to public through banking or non-banking financing institution where the government bears the loss risk if the non-performing occurs; and

2. risk sharing namely the pattern of fund distribution by the government to public through banking or non-banking financing institution where the government and banking or non-banking financing institution share the loss risk if non-performing occurs.

Definition of state receivables as mentioned in GR No. 28/2022 is the amount of money that must be paid to the state based on a regulation, agreement or any other reason. State Receivables which mentioned herein include the receivables of central government/regional government.

1. central government/regional government receivables are receivables from state ministry/institution, State/Regional General Treasurer and regional institution which are consolidated/recorded in the Central Government Financial Report/Regional Government Financial Report, including therein the receivables in Public Service Agency/Regional Public Service Agency, and the receivables of Central Government/Regional Government which distributed through the SOE/Regional-owned Enterprise by way of channeling and risk sharing patterns;

2. In addition, the receivables of central government/regional government also include the receivables in state institution/commission which established based on the Constitution or law which obtains the regular budget from the Government and/or the receivables thereof are consolidated/recorded in the Central Government Financial Report/Regional Government Financial Report.

In Article 74 (1) of GR No. 28/2022 in conjunction with its elucidation conveyed that the receivables of SOE/Regional-owned Enterprise of its collecting authority cannot be assigned to the PUPN directly, but its collecting authority can be assigned to the PUPN if it has been assigned in advance to the Central Government/Regional Government. In which for its further regulation, Article 74 paragraph (3) GR No. 28/2022 states that it will be regulated in the Ministerial Regulation.

The State Receivables from the Assignment of IBRA and Bank Liquidation (1998)

 Furthermore, in the Elucidation of Article 3 paragraph (2) GR No. 28/2022, it is stated that the State Receivables including:

1. all claim rights which transferred to the state based on the assignment from the Indonesian Bank Restructuring Agency (“IBRA“) to the government after the end of duty period of the respective agency as stipulated in Presidential Decree Number 15 of 2004 regarding Termination of Duty and Dissolution of Indonesian Bank Restructuring Agency; and
2. the State receivables which obtained after the end of duty of the liquidation team of 16 (sixteen) banks in liquidation which their business licenses were revoked in 1998.

Execution of Mortgage Rights through Auction

One of the authorities of the KPKNL as the implementing unit of PUPN is to conduct the auction.

Regarding the authority to conduct the execution of Mortgage Rights through public sale (auction), the SOE/Regional-owned Enterprise assigns the implementation of Mortgage Rights execution auction through the KPKNL. Based on Article 3 paragraph (1) of the Minister of Finance Regulation Number 213/PMK.06/2020 regarding the Guidelines of Auction Implementation, the mortgage rights execution auction is classified as the non-voluntary executorial attachment.

According to Article 10 paragraph (1) of Minister of Finance Regulation Number 113/PMK.06/2019 regarding Auction Hall, the Government does not allow the private auction hall to act in the auction of non-voluntary executorial attachment which among others include the court execution, mortgages rights (hak tanggungan) and pawnshop. In case of non-performing loan, the collateral can be auctioned by Private Auction Hall provided that it does not involve any court execution. The debtor’s assets can be auctioned to cover the respective debt after the consent occurred between the debtor and the creditor and it does not constitute a case in any court. In the event that the assets of SOE/Regional-owned Enterprise will be auctioned due to the court execution or mortgage rights execution, then the auction thereof will be conducted by the KPKNL.

Therefore, the implementation of Mortgage Rights auction execution must be conducted through the KPKNL.

In conclusion:

1. The SOE/Regional-owned Enterprise can assign its collection authority to the PUPN, towards the receivables of SOE which arising from the distribution of fund through channeling and risk sharing.

2. If the SOE/Regional-owned Enterprise intends to assign the collection of its receivables to the PUPN, the respective SOE/Regional-owned Enterprise may assign the receivables in advance to the Central Government/Regional Government, thereafter the Central Government/Regional Government transfer the collection of the receivables to PUPN.

3. The PUPN has authority to collect the receivables in the form of (i) collection rights which transferred to the state based on the assignment from the IBRA to the government; and (ii) the State Receivables which obtained after the end of duty of the liquidation team of 16 (sixteen) banks in liquidation which their business licenses were revoked in 1998.

4. SOE/Regional-owned Enterprise must assign the implementation of Mortgage Rights execution auction through the KPKNL.

Legal basis:

1. Government Regulation in Lieu of Law No. 49 of 1960 regarding Committee of State Receivables Management;
2. Law No. 1 of 2004 regarding State Treasury;
3. Government Regulation No. 28 of 2022 regarding State Receivables Management by Committee of State Receivables Management;
4. Presidential Regulation No. 89 of 2006 regarding the Committee of State Receivables Management;
5. Presidential Regulation No. 57 of 2020 regarding Ministry of Finance;
6. Minister of Finance Regulation No. 240/PMK.06/2016 regarding State Receivables Management;
7. Minister of Finance Regulation No. 102/PMK.06/2017 regarding Membership and Work Procedures on the Committee of State Receivables Management;
8. Minister of Finance Regulation No. 113/PMK.06/2019 regarding Auction Hall;
9. Minister of Finance Regulation No. 163/PMK.06/2020 of 2020 regarding State Receivables Management in State Ministry/institution, State General Treasurer and Simple Management by the Committee of State Receivables Management; and
10. Minister of Finance Regulation No. 213/PMK.06/2020 regarding Guidelines of Auction Implementation.

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Published by: Almaida Askandar, Ebenezer Sianipar and Malik Aufari

Published on: 31 October 2023