Indonesia has recently enacted important legislation respecting
secured transactions. The effect of the legislation is to create
for the first time in Indonesia a registerable security interest in
movable goods based on fiduciary transfer. Law No. 42/1999 (Law 42
or the Fiduciary Transfer Law) regarding fiduciary transfer, which
became effective on September 30 1999, codifies existing case law
regarding fiduciary transfer, by requiring for the first time that
a fiduciary transfer agreement be in the form of a notarial deed,
and establishes a national registry where, also for the first time,
fiduciary transfers can be registered.
A fiduciary transfer is a transfer of title over specified goods
to a creditor - but only in trust, for the purposes of securing a
debt. Once the debt is paid, title reverts to the original owner.
Even in the case of default, the creditor cannot acquire the title
outright; he must sell the goods and satisfy his debt from the
proceeds of the sale. Prior to Law...