The Performance Bank Guarantee is a crucial document in Indonesian business transactions, particularly in construction, infrastructure, and large-scale projects. It serves as a risk mitigation tool where a bank provides financial security to a project owner against potential non-performance by a contractor or supplier. Under Indonesian law, these guarantees are regulated by Bank Indonesia and the Financial Services Authority (OJK), requiring specific formatting, content, and execution procedures. The document becomes necessary when a contract requires performance security, typically ranging from 5% to 10% of the contract value. The Performance Bank Guarantee includes detailed information about all parties involved, the underlying contract, guarantee amount, validity period, and claim conditions. It's particularly important in government contracts and large commercial projects where substantial financial interests need protection.
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1. Bank Details and Reference Number: Full details of the issuing bank and unique guarantee reference number
2. Date: Date of issuance of the guarantee
3. Beneficiary Details: Full name and address of the party receiving the guarantee
4. Principal Details: Full name and address of the party for whom the guarantee is being issued
5. Underlying Contract Reference: Details of the main contract or agreement for which this performance guarantee is being provided
6. Guarantee Amount: The maximum amount for which the bank guarantee is issued, in both numbers and words
7. Guarantee Scope: Clear description of what the guarantee covers in terms of the principal's obligations
8. Conditions for Claim: Specific conditions and process under which the beneficiary can make a claim under the guarantee
9. Expiry Date: Clear statement of when the guarantee expires or terminates
10. Governing Law and Jurisdiction: Specification that Indonesian law governs and the relevant jurisdiction for disputes
11. Bank's Undertaking: The formal commitment by the bank to pay upon valid demand
12. Authorized Signatures: Space for bank officials' signatures and bank seal
1. Claim Period: Additional section specifying the period within which claims must be made after expiry, if different from standard terms
2. Reduction Clause: Section specifying if and how the guarantee amount can be reduced over time, used for long-term projects
3. Assignment Restrictions: Section specifically prohibiting or allowing assignment of the guarantee, if needed
4. Language Declaration: Required when the guarantee is issued in multiple languages, specifying which version prevails
5. Counter-Guarantee Reference: Required when issued under a counter-guarantee structure, referencing the counter-guarantee details
6. Special Conditions: Any project-specific conditions or requirements that affect the guarantee's operation
1. Specimen Claim Format: Standard format for submitting claims under the guarantee
2. Copy of Underlying Contract: Relevant pages or sections of the main contract referring to the performance guarantee requirement
3. Authorization Evidence: Evidence of the authority of bank signatories (sometimes required by beneficiaries)
4. Performance Milestones: If the guarantee amount reduces based on performance milestones, a schedule detailing these
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