Towards the end of 2015, the House of Representatives (House) finally passed the Bill on Guarantees (“Bill”).[1] Out of 37 laws listed under the 2015 National Legislation Program, this was the only single bill to pass last year.[2] Indeed, this long awaited Bill was initially formulated a full two decades ago and was proposed to the House nine years before the Draft Bill on Guarantees (“Draft Bill”)[3] was eventually prioritized and debated by the Legislation Office at the House.[4]
 
In essence, the Bill functions as the primary framework for the establishment of guarantee and re-guarantee institutions (collectively referred to as “guarantor institutions”), and also encompasses their business conduct. These institutions act as guarantors to financial-service institutions as regards the provision of debtor credit facilities targeted towards micro-, small- and medium-scale enterprises and cooperatives (usaha mikro, kecil, menengah dan koperasi – UMKMK), many of which are not bankable due to lacking the sufficient collateral to back any loans.[5]
 
From a business perspective, access to credit facilities is crucial for all businesses, regardless of their size, because credit facilities create better opportunities for a business to compete, grow and innovate – the three main survival factors for any company struggling in a competitive marketplace. With the inauguration the ASEAN Economic Community (AEC) this year, the existence of guarantee and re-guarantee institutions has become even more vital in order to ensure better access to credit facilities for UMKMKs, which have an important strategic role to play as part of Indonesia’s grassroots economy.[6]