Amendment to Financial Services Authority Regulation Number 2/POJK.05/2017 Concerning the Conduct of Business of Guarantee Institutions

FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA
EXCERPT
FINANCIAL SERVICES AUTHORITY REGULATION
REPUBLIC OF INDONESIA
NUMBER 30 /POJK.05/2018
CONCERNING
AMENDMENT TO FINANCIAL SERVICES AUTHORITY REGULATION NUMBER 2/POJK.05/2017 CONCERNING THE CONDUCT OF BUSINESS OF GUARANTEE INSTITUTIONS BY THE GRACE OF GOD THE MOST HIGH, THE COMMISSIONERS COUNCIL OF THE FINANCIAL SERVICES AUTHORITY, Considering:
a. that in providing alternative investment instrument choices to guarantee institutions without ignoring the aspect of prudence, suitability with the liability characteristics of guarantee institutions and the returns obtained, as well as increasing the role of domestic investors in supporting infrastructure development, it is necessary to improve the Financial Services Authority Regulation Number 2/POJK.05/2017 concerning the Conduct of Business of Guarantee Institutions; b. that based on the considerations as referred to in letter a, it is necessary to establish a Financial Services Authority Regulation concerning Amendment to Financial Services Authority Regulation Number 2/POJK.05/2017 concerning the Conduct of Business of Guarantee Institutions; Recalling:

1. Law Number 21 of 2011 concerning the Financial Services Authority (State Gazette of the Republic of Indonesia Year 2011 Number 111, Additional State Gazette of the Republic of Indonesia Number 5253);
2. Law Number 1 of 2016 concerning Guarantee (State Gazette of the Republic of Indonesia Year 2016 Number 9, Additional State Gazette of the Republic of Indonesia Number 5835);
3. Financial Services Authority Regulation Number 2/POJK.05/2017 concerning the Conduct of Business of Guarantee Institutions (State Gazette of the Republic of Indonesia Year 2017 Number 7, Additional State Gazette of the Republic of Indonesia Number 6014);
   DECIDING:
   To establish: FINANCIAL SERVICES AUTHORITY REGULATION CONCERNING AMENDMENT TO FINANCIAL SERVICES AUTHORITY REGULATION NUMBER 2/POJK.05/2017 CONCERNING THE CONDUCT OF BUSINESS OF GUARANTEE INSTITUTIONS.

Article I
Several provisions in the Financial Services Authority Regulation Number 2/POJK.05/2017 concerning the Conduct of Business of Guarantee Institutions (State Gazette of the Republic of Indonesia Year 2017 Number 7, Additional State Gazette of the Republic of Indonesia Number 6014) are amended as follows:

1. The provision of paragraph (1) of Article 33 is amended, so that Article 33 reads as follows:
   Article 33
   (1) Guarantee Companies and Reinsurance Companies must place investments in the following types of investments:
   a. deposits at banks; b. government securities;
   c. securities issued by Bank Indonesia;
   d. corporate bonds; e. shares listed on the Indonesia Stock Exchange; f. asset-backed securities; g. mutual funds; h. medium term notes;
   i. repurchase agreements;
   j. real estate investment funds in the form of collective investment contracts; k. land and buildings;
   l. direct participation in companies in the financial services sector in Indonesia;
   m. regional bonds; and/or n. infrastructure investment funds in the form of collective investment contracts.
   (2) The types of investments that can be placed by Guarantee Companies and Reinsurance Companies as referred to in paragraph (1) also include types of investments using Sharia Principles.

2. The provision of Article 34 is amended, so that Article 34 reads as follows:
   Article 34
   Sharia Guarantee Companies, Sharia Reinsurance Companies, and Sharia Business Units (UUS) must place investments in the following types of investments:
   a. deposits at Sharia commercial banks, Sharia business units at commercial banks, and Sharia people's credit banks; b. Sharia government securities;
   c. Sharia securities issued by Bank Indonesia;
   d. corporate sukuk; e. shares listed on the Indonesia Stock Exchange and included in the list of Sharia securities established by the Financial Services Authority; f. Sharia asset-backed securities; g. Sharia mutual funds; h. Sharia medium term notes;
   i. Sharia repurchase agreements;
   j. Sharia real estate investment funds in the form of collective investment contracts; k. direct participation in companies in the Sharia financial services sector in Indonesia;
   l. regional sukuk; and/or
   m. infrastructure investment funds in the form of collective investment contracts.

3. Between Article 35 and Article 36, 1 (one) article is inserted, namely Article 35A so that it reads as follows:
   Article 35A
   (1) Investments in regional bonds as referred to in Article 33 paragraph (1) letter m and regional sukuk as referred to in Article 34 letter l must meet the following provisions:
   a. have received an effective statement from the Financial Services Authority; and b. have an investment grade rating from a securities rating company recognized by the Financial Services Authority. (2) Investments in the form of infrastructure investment funds in the form of collective investment contracts as referred to in Article 33 paragraph (1) letter n must meet the following provisions:
   a. for infrastructure investment funds in the form of collective investment contracts issued through a public offering, have received an effective statement from the Financial Services Authority; b. for infrastructure investment funds in the form of collective investment contracts issued not through a public offering, have been registered with the Financial Services Authority;
   c. have an investment grade rating from a securities rating company recognized by the Financial Services Authority; and
   d. one of the investment portfolios of the infrastructure investment fund in the form of collective investment contract in the form of infrastructure assets has generated income. (3) Investments in the form of infrastructure investment funds in the form of collective investment contracts as referred to in Article 34 letter m must meet the following provisions:
   a. their management does not contradict Sharia principles in the capital market; b. for infrastructure investment funds in the form of collective investment contracts issued through a public offering, have received an effective statement from the Financial Services Authority;
   c. for infrastructure investment funds in the form of collective investment contracts issued not through a public offering, have been registered with the Financial Services Authority;
   d. have an investment grade rating from a securities rating company recognized by the Financial Services Authority; and e. one of the investment portfolios of the infrastructure investment fund in the form of collective investment contract in the form of infrastructure assets has generated income.

4. Between Article 38 and Article 39, 1 (one) article is inserted, namely Article 38A so that it reads as follows:
   Article 38A
   (1) Investments in the form of regional bonds as referred to in Article 33 paragraph (1) letter m, and/or regional sukuk as referred to in Article 34 letter l are prohibited from exceeding 10% (ten percent) for each issuer and in total are prohibited from exceeding 20% (twenty percent) of the total investment amount. (2) Investments in the form of infrastructure investment funds in the form of collective investment contracts as referred to in Article 33 paragraph (1) letter n and Article 34 letter m are prohibited from exceeding 10% (ten percent) of the total investment amount for each investment manager and in total are prohibited from exceeding 20% (twenty percent) of the total investment amount.

5. The provisions of paragraph (1) and paragraph (2) of Article 67 are amended, so that Article 67 reads as follows:
   Article 67
   (1) Guarantee Institutions that do not meet the provisions as referred to in Article 9 paragraph (2), Article 11 paragraph (4), Article 13, Article 14, Article 20 paragraph (2), Article 25 paragraph (1), Article 30 paragraph (1), Article 33 paragraph (1), Article 34, Article 35, Article 35A, Article 37, Article 38 paragraph (1), paragraph (3), paragraph (4), paragraph (5), paragraph (6), paragraph (7), paragraph (8), paragraph (9), paragraph (10), paragraph (11), paragraph (12), and paragraph (14), Article 38A, Article 39, Article 40 paragraph (1), Article 58 paragraph (1), Article 59 paragraph (1), Article 60, Article 61 paragraph (1) and paragraph (2), and/or Article 62 paragraph (1) are subject to administrative sanctions in a phased manner consisting of:
   a. written warnings; b. suspension of business activities; or
   c. revocation of business licenses.
   (2) Guarantee Companies that have a Sharia Business Unit (UUS) that do not meet the provisions as referred to in Article 9 paragraph (2), Article 11 paragraph (4), Article 13, Article 14, Article 20 paragraph (2), Article 25 paragraph (1), Article 30 paragraph (1), Article 34, Article 35, Article 35A paragraph (1) and paragraph (3), Article 37 paragraph (2), Article 38 paragraph (1), paragraph (3), paragraph (4), paragraph (5), paragraph (6), paragraph (7), paragraph (8), paragraph (9), paragraph (10), paragraph (12), and paragraph (14), Article 38A, Article 39, Article 40 paragraph (1), Article 58 paragraph (1), Article 60, and/or Article 62 paragraph (1) are subject to administrative sanctions in a phased manner consisting of:
   a. written warnings; b. suspension of Sharia Business Unit (UUS) activities; or
   c. revocation of the Sharia Business Unit (UUS) license.
   (3) Guarantee Institutions that are subject to sanctions for suspension of business activities and/or suspension of Sharia Business Unit (UUS) activities as referred to in paragraph (6) are prohibited from conducting business activities. (4) Written warning sanctions as referred to in paragraph (1) letter a and/or paragraph (2) letter a can be given at most 3 (three) times consecutively with a validity period of each of at most 2 (two) months. (5) In the event that before the end of the validity period of the written warning sanction as referred to in paragraph (4), the Guarantee Institution has met the provisions as referred to in paragraph (1) and/or paragraph (2), the Financial Services Authority revokes the written warning sanction. (6) In the event that the validity period of the third written warning as referred to in paragraph (4) ends and the Guarantee Institution still does not meet the provisions as referred to in paragraph (1) and/or paragraph (2), the Financial Services Authority imposes sanctions for suspension of business activities and/or sanctions for suspension of Sharia Business Unit (UUS) activities. (7) Sanctions for suspension of business activities and/or sanctions for suspension of Sharia Business Unit (UUS) activities are given in writing and take effect from the date of determination for at most 6 (six) months. (8) In the event that the validity period of the written warning sanction, suspension of business activities sanction, and/or suspension of Sharia Business Unit (UUS) activities sanction ends on a holiday, the written warning sanction, suspension of business activities sanction, and/or suspension of Sharia Business Unit (UUS) activities sanction take effect until the first working day thereafter. (9) Guarantee Institutions subject to sanctions for suspension of business activities and/or sanctions for suspension of Sharia Business Unit (UUS) activities as referred to in paragraph (6) are prohibited from conducting business activities. (10) In the event that before the end of the validity period of the suspension of business activities and/or suspension of Sharia Business Unit (UUS) activities as referred to in paragraph (7), the Guarantee Institution has met the provisions as referred to in paragraph (1) and/or paragraph (2), the Financial Services Authority revokes the sanctions for suspension of business activities and/or sanctions for suspension of Sharia Business Unit (UUS) activities. (11) In the event that the sanctions for suspension of business activities and/or sanctions for suspension of Sharia Business Unit (UUS) activities are still in effect and the Guarantee Institution continues to conduct Guarantee business activities, the Financial Services Authority can directly impose sanctions for revocation of business licenses and/or sanctions for revocation of Sharia Business Unit (UUS) licenses. (12) In the event that by the end of the validity period of the sanctions for suspension of business activities
   and/or sanctions for suspension of Sharia Business Unit (UUS) activities as referred to in paragraph (7), the Guarantee Institution still does not meet the provisions as referred to in paragraph (1) and/or paragraph (2), the Financial Services Authority revokes the business license and/or Sharia Business Unit (UUS) license of the respective Guarantee Institution. (13) The Financial Services Authority can announce sanctions for suspension of business activities and/or sanctions for suspension of Sharia Business Unit (UUS) activities as referred to in paragraph (1) letter b and/or paragraph (2) letter b and/or sanctions for revocation of business licenses and/or sanctions for revocation of licenses as referred to in paragraph (1) letter c and/or paragraph (2) letter c to the public.

Article II
This Financial Services Authority Regulation takes effect on the date of its promulgation.

This excerpt is in accordance with the original.
Director of Law 1
Legal Department signed
Yuliana

In order for everyone to know, it is ordered to promulgate this Financial Services Authority Regulation by placing it in the State Gazette of the Republic of Indonesia.
Determined in Jakarta on December 10, 2018
CHAIRMAN OF THE COMMISSIONERS COUNCIL
FINANCIAL SERVICES AUTHORITY
REPUBLIC OF INDONESIA, signed
WIMBOH SANTOSO

Promulgated in Jakarta on December 10, 2018

MINISTER OF LAW AND HUMAN RIGHTS
REPUBLIC OF INDONESIA, signed
YASONNA H. LAOLY
STATE GAZETTE OF THE REPUBLIC OF INDONESIA YEAR 2018 NUMBER 246

EXPLANATION
OF
FINANCIAL SERVICES AUTHORITY REGULATION
REPUBLIC OF INDONESIA
NUMBER 30 /POJK.05/2018
CONCERNING
AMENDMENT TO FINANCIAL SERVICES AUTHORITY REGULATION NUMBER 2/POJK.05/2017 CONCERNING THE CONDUCT OF BUSINESS OF GUARANTEE INSTITUTIONS

I. GENERAL
Financial Services Authority Regulation Number 2/POJK.05/2017 concerning the Conduct of Business of Guarantee Institutions is the legal basis for the Financial Services Authority in regulating the implementation of the conduct of business of Guarantee Institutions currently. One of the provisions regulated in Financial Services Authority Regulation Number 2/POJK.05/2017 concerning the Conduct of Business of Guarantee Institutions is the choice of investment instruments that can be used as alternatives for Guarantee Institutions to invest. Currently, there are several investment products that exist and have not been included in the choice of investment instruments for Guarantee Institutions, namely infrastructure investment funds in the form of collective investment contracts and regional bonds. Both types of investment instruments can be used to provide alternative choices of investment instruments to Guarantee Institutions, while always prioritizing the aspect of prudence, suitability with the liability characteristics of Guarantee Institutions and the returns obtained. In addition, both types of investment instruments can be used to increase the role of domestic investors, in this case Guarantee Institutions, in supporting infrastructure development. In relation to the above, it is necessary to improve Financial Services Authority Regulation Number 32/POJK.05/2017 concerning the Conduct of Business of Guarantee Institutions.

II. ARTICLE BY ARTICLE
Article I
Number 1
Article 33
Paragraph (1)
Letter a
What is meant by "deposits at banks" are deposit certificates, time deposits, and on-call deposits.
Letter b
What is meant by "government securities" are securities issued by the Government of the Republic of Indonesia including government debt securities as referred to in the Law concerning government debt securities and Sharia government securities as referred to in the Law concerning Sharia government securities. Letter c Sufficiently clear. Letter d Sufficiently clear. Letter e Sufficiently clear. Letter f Included in asset-backed securities are among others asset-backed securities in the form of participation certificates for secondary housing financing. Letter g What is meant by "mutual funds" are containers used to collect funds from investor public for subsequent investment in a portfolio of securities by investment managers as referred to in the Law concerning capital markets. Letter h What is meant by "medium term notes" are debt securities issued by companies and have a term of 1 (one) to 5 (five) years and are registered at the Indonesia Central Securities Depository. Letter i What is meant by "repurchase agreement" is a transaction to sell securities with a promise to buy back at a specified time and price. Letter j Sufficiently clear. Letter k Sufficiently clear. Letter l Sufficiently clear. Letter m What is meant by "regional bonds" are regional loans offered to the public through a public offering in the capital market. Letter n What is meant by "infrastructure investment funds in the form of collective investment contracts" are containers in the form of collective investment contracts used to collect funds from the investor public for subsequent investment of most of the funds into infrastructure assets by investment managers.

Paragraph (2)
Sufficiently clear

Number 2
Article 34
Letter a
What is meant by "deposits at Sharia commercial banks" are deposit certificates, time deposits, and on-call deposits.
Letter b
What is meant by "Sharia government securities" are government securities issued based on Sharia Principles, as evidence of participation in the assets of Sharia government securities, both in rupiah currency and foreign currency as referred to in the Law concerning Sharia government securities. Letter c Sufficiently clear. Letter d Sufficiently clear. Letter e Sufficiently clear. Letter f Included in Sharia asset-backed securities are among others Sharia asset-backed securities in the form of participation certificates for secondary housing financing. Letter g What is meant by "Sharia mutual funds" are mutual funds as referred to in the Law concerning capital markets and its implementing regulations whose management does not contradict Sharia principles in the capital market. Letter h What is meant by "Sharia medium term notes" are evidence certificates issued by companies based on Sharia Principles, which essentially contain the company's financial obligations and have a term of 1 (one) to 5 (five) years and are registered at the Indonesia Central Securities Depository. Letter i What is meant by "Sharia repurchase agreement" is a transaction to sell Sharia securities with a promise to buy back at a specified time and price. Letter j Sufficiently clear. Letter k Sufficiently clear. Letter l What is meant by "regional sukuk" are Sharia securities in the form of certificates or proof of ownership that have equal value and represent an inseparable or undivided portion of the underlying assets issued by regional governments. Letter m Sufficiently clear.

Number 3
Article 35A
Paragraph (1)
Sufficiently clear.
Paragraph (2)
Sufficiently clear.
Paragraph (3)
Letter a
What is meant by "Sharia principles in the capital market" are Islamic legal principles in Sharia activities in the capital market based on fatwas of the National Sharia Council - Indonesian Ulema Council, as long as the fatwa does not contradict Financial Services Authority Regulations concerning the Application of Sharia Principles in the Capital Market and/or other Financial Services Authority Regulations based on fatwas of the National Sharia Council - Indonesian Ulema Council. Letter b Sufficiently clear. Letter c Sufficiently clear. Letter d Sufficiently clear. Letter e Sufficiently clear.

Number 4
Article 38A
Sufficiently clear.

Number 5
Article 67
Sufficiently clear.

Article II
Sufficiently clear.

ADDITIONAL STATE GAZETTE OF THE REPUBLIC OF INDONESIA NUMBER 6277