Debt Collection Agency Indonesia
Amicable Debt Collections Indonesia
1. General information
Payments in Indonesia usually take 30 days on average; however, delays may reach up to 20 days.
The payment behaviour of Indonesian companies in recent years has improved and would be somewhere between acceptable and good.
During the amicable phase, it is common practice to appoint a lawyer to serve a warning letter to the debtor. The warning letter provides a stern message to the debtor that the creditor is vigilant about the outstanding debt.
We can only serve the debtor with a warning letter if we already possess strong preliminary evidence, such as the sale purchase agreement, invoices, packing or shipping list.
1.2. Local agents
At the present time, the most effective way is to use a local lawyer.
1.3. Interest
Indonesian law prescribes no standard payment terms, but the Civil Code regulates late payment interest, which has to be paid by the defaulting party at the request of the nondefaulting party before a court.
Two sorts of interest would apply. A conventional interest rate (‘bunga konvensional’) may be agreed by the parties through a contract and apply in case of late payment or if a breach of other obligations occurred.
However, if no contractual agreement exists, a 6% per annum legal interest rate (‘bunga moratoir’) is set by law.

1.4. Debt collection costs Indonesia
To date, there is no law or regulation in Indonesia that regulates collection costs in particular or debt collection activities in general.
However, within Indonesian law, there is a split between material and immaterial losses. Material losses is direct losses caused by the debt, i.e. the principal debt and/or the cost of shipping.
Immaterial losses are indirect losses resulting from the debt. Legal costs will be included as an indirect loss.
2. Legal collections Indonesia
2.1. General information
Legal action in Indonesia is usually lengthy and costly, and decisions may be inconsistent. Therefore, it is always advisable to consider amicable settlement opportunities as a serious alternative to formal proceedings, which overall should only be commenced when the debt is very significant (in excess of USD 500,000).
2.2. Required documents
According to article 164 of ‘Herzienne Indlands Reglement’ (HIR), the required documents are as follows:
To prove the argument in court, we can use the following evidences:
1) letter or written document,
2) third party witness,
3) suspicion,
4) recognition by the defendant,
5) oath.
2.3. Legal dunning procedure
The composition of a typical civil trial in Indonesia is as follows:
The first hearing will open the conference by asking the identity of the party, then carry on and urge the parties to engage in mediation or conciliation. If mediation is not reached, the court will proceed to the next stage (time for mediation is 30 days).
However, if mediation is reached, it will be made of consent, and the trial is completed.
At the second session, the agenda is the submission of the defendant to answer the claims of the plaintiffs. The answer is made in three documents for the plaintiff, the judge and the defendant’s own archives.
The third session is a hearing, during which the submission of the plaintiff’s reply is expected. The plaintiff’s reply is the response to answer from the defendant stated in the second session above.
The fourth session is the rejoinder submission. Rejoinder is a response to the plaintiff’s reply.
The fifth session is to provide evidence and/or witnesses by the plaintiff against the plaintiff’s arguments previously submitted to strengthen the plaintiff’s lawsuit.
The sixth session consists of the evidence and/or witnesses by the defendant to amplify or reinforce their answer.
The seventh session is to submit the conclusions by the parties as a final step to strengthen their arguments before the judge issues a verdict. The eighth session consists of the judge’s decision.

2.4. Lawsuit
Below are the tasks to prepare in a lawsuit:
- Prepare a power of attorney
- Prepare the primary opinion and advice regarding the case
- Prepare and submit the draft lawsuit, any responses, sure-rejoinder, testimony and conclusion related to the civil lawsuit
- Attend court mediation process
- Attend any court hearings
- Apply for confiscation of execution at court (if any)
- Brief and propose any witness in court
- Submit any supporting documents or evidence.
2.5. Debt collection costs
Costs of legal action are USD 10,000–USD 40,000, depending on the complexity of the case.
2.6. Expected time frame
The time period of a civil court proceeding at the district court may be 270 days maximum.
3. Insolvency proceedings
3.1 General information
The aim of the insolvency proceedings is to pay out all creditors with the same quota by liquidating the assets of the debtor company or collecting the enforceable income of the individual who is declared bankrupt.
The procedure is called suspension of debt settlement obligation (PKPU). The procedure for applying for PKPU will be addressed to the chairman of the commercial court, whose jurisdiction covers the legal position of the debtor.
The application will be signed by the debtor and the advocate.
If the applicant is the creditor, the court will summon the debtor by the bailiff by registered express mail no later than seven days before the hearing at PKPU court.

3.2. Proceedings
Insolvency in Indonesia is not a matter of cash flow or balance sheet.
A debtor having two or more creditors failing to pay at least one debt that has matured and become payable may be declared insolvent by the decision of Indonesian Commercial Court, either at the debtor’s own petition or at the request of one or more of the debtor’s creditors.
The term ‘failing to pay’ is interpreted broadly and does not necessarily mean that the debtor does not have sufficient cash flow to pay their debts.
Sometimes, a debtor would be declared insolvent by the Indonesian Commercial Court when, following a suspension of payment procedure, no composition plan has been approved by the creditors and the court alike.
The Insolvency Law No 4/1998 (Law 4/1998) was replaced in 2004 by the Law on Insolvency and Suspension of Payment No 37/2004 (the Insolvency Law), which governs insolvency and suspension of payment procedures in Indonesia.
This framework has reduced the amount of inconsistent decisions that used to be rendered, but in practice the insolvency system is still to be tested.
3.3. Required documents
- The composition plan for rescheduling payment of the debt
- The shipping or packing list
- An original power of attorney
- Copies of invoices
- Copies of contracts
- Copies of orders, order confirmations and delivery notes
- Copies of general conditions of sales, if there are any
- Copies of any other correspondence that may verify the claim.
3.4. Expected time frame and outcome
There are two agendas:
- Temporary PKPU – 45 days
- Permanent PKPU – 270 days maximum.
The goal is to reach a peaceful settlement and have the debt’s repayment scheduled.