Business Regulations in Indonesia

Employment of Foreign Workers in Indonesia: Minister of Manpower Regulation No. 8 of 2021

Following the enactment of Government Regulation No. 34 of 2021 regarding the Utilization of Foreign Workers (February 2, 2021) (“GR 34/2021”), the Minister of Manpower (“MOM”) has issued MOM Regulation No. 8/2021

New Immigration Regulation Promises More Ease and Clarity for Foreigners in Indonesia

As a continuation of the Indonesian Government’s stated goal to make Indonesia more investment friendly through the enactment of Law No. 11 of 2020 regarding Job Creation, a new Government Regulation

Indonesia Introduces New Stamp Duty Law

The Government of Indonesia recently passed a new Stamp Duty Law (Law No. 10 of 2020 on Stamp Duty), which came into effect on January 1, 2021. The new Stamp Duty Law revokes Law No. 13 of 1985 on Stamp Duty (“Law 13/1985”).

Indonesia’s New Investment List – Summary of Draft Presidential Regulation

Investment in Indonesia is subject to the Negative Investment List, or DNI. The current Negative Investment List was issued in 2016 through Presidential Regulation No. 44 of 2016 regarding the List of Business Fields that Are Closed and Business Fields that Are Conditionally Open for Investment.

Indonesia Omnibus Law and the Impact on Tax Laws

The Indonesian Government recently passed Law No. 11 of 2020 regarding Job Creation (the “Omnibus Law”). The stated aim of the Omnibus Law is to bolster investment and create jobs by streamlining regulations and simplifying the licensing process to improve the ease of doing business in Indonesia.

Indonesian Employment Law Update: New Draft Government Regulation on Termination Benefits

Media reports indicate that it is likely a new Government Regulation (“GR”) on the calculation of termination pay in Indonesia will be issued as early as February 2021. An official draft of the GR has been circulated by the Coordinating Minister for Economic Affairs.

Indonesia Omnibus Law – Changes to the Shipping Law Hint at Smoother Sailing for Business

) Indonesian President Joko Widodo recently signed Law No. 11 of 2020 on Jobs Creation (the “Omnibus Law”). The stated aim of the Omnibus Law is to bolster investment and create jobs by streamlining regulations and simplifying the licensing process to improve the ease of doing business in Indonesia.

Indonesia Omnibus Bill – Potential Changes to the Immigration Law

The Indonesian House of Representatives (DPR) recently passed the Omnibus Bill on Job Creation (the "Omnibus Bill"). The stated aim of the Omnibus Bill is to bolster investment and create jobs by streamlining regulations and simplifying the licensing process to improve the ease of doing business in Indonesia.

Indonesia’s Omnibus Law Puts Focus on Direct Use of Geothermal Resources

The Indonesian Government enacted Law No. 11 of 2020 regarding Jobs Creation (the “Omnibus Law”) on November 2, 2020. The stated aim of the Omnibus Law is to bolster investment and create jobs by streamlining regulations and simplifying the licensing process to improve the ease of doing business in Indonesia.

Indonesia Omnibus Law – Changes to the Company Law

Indonesia’s closely watched omnibus jobs creation bill recently became law. The stated aim of the Omnibus Law is to bolster investment and create jobs by streamlining regulations and simplifying the licensing process to improve the ease of doing business in Indonesia.

Indonesia Omnibus Law – Changes to the Halal Products Law

The stated aim of Law No. 11 Year 2020 on Jobs Creation (the “Omnibus Law”) is to bolster investment and create jobs by streamlining regulations and simplifying the licensing process to improve the ease of doing business in Indonesia

COVID-19 in Indonesia: Restrictions Loosen as Jakarta Returns to Transitional PSBB

Last month, the rising number of COVID-19 cases led the DKI Jakarta provincial government to put an emergency brake on the Transitional PSBB period and re-enact Large-Scale Social Restrictions (Pembatasan Sosial Berskala Besar or “PSBB”).

Indonesian Omnibus Bill – Changes to the Halal Products Law

The Indonesian House of Representatives (DPR) recently passed the Omnibus Bill on Job Creation (the “Omnibus Bill”). The stated aim of the Omnibus Bill is to bolster investment and create jobs by streamlining regulations and simplifying the licensing process to improve the ease of doing business in Indonesia.

Indonesian Omnibus Bill – Changes to Labor-Related Sectors

The Indonesian House of Representatives (DPR) recently passed the Omnibus Bill on Job Creation (the “Omnibus Bill”). The stated aim of the Omnibus Law is to bolster investment and create jobs by streamlining regulations and simplifying the licensing process to improve the ease of doing business in Indonesia.

Latest Update on Indonesian Visas in the Time of COVID-19 – Re-Opening to Foreigners

With the stated aim of supporting the recovery of Indonesia’s coronavirus-battered economy, the Minister of Law and Human Rights (“MOLHR”) has issued MOLHR Regulation No. 26 of 2020 regarding Visa and Stay Permit During the New Normal

New Developments in Indonesian Immigration Policy

On September 11, 2020, the Indonesian Government enacted a new regulation that introduces several changes to the immigration regime that affect foreigners, Indonesians and the procurement of travel documents.

New Regulation Puts Focus on Local Resources in Indonesia’s Construction Sector

A new regulation has introduced significant changes to the implementation of Indonesia’s Construction Services Law, which will affect business actors in the country’s construction sector.

Indonesia Relaxes Mandatory Employer Contributions to Manpower Social Security Programs Amid COVID-1

With COVID-19 infections not slowing in the country, the Government of Indonesia (“GOI”) has continued to issue regulations aimed at fighting the pandemic and the economic downturn it has caused.

New Rules and Requirements as Jakarta Returns to COVID-19 Lockdown

With the number of COVID-19 cases continuing to rise, DKI Jakarta Governor Anies Baswedan announced the re-enactment of Large-Scale Social Restrictions (Pembatasan Sosial Berskala Besar or “PSBB”) in the province from September 14 to September 27, 2020.

Indonesian Bankruptcy and PKPU Proceedings in a Time of COVID-19

The COVID-19 pandemic has caused more economic harm to Indonesia than the subprime mortgage crisis in 2008. As part of efforts to check the spread of the virus, the Indonesian government has implemented a policy of Large-Scale Social Restrictions (Pembatasan Sosial Berskala Besar or “PSBB”), requiring most businesses to cease or at least pare down activities.

No New Mining Licenses – A Reminder to Governors in Indonesia

Indonesia’s acting Director General of Mining and Coal (“DGMC”) has issued a letter to the country’s provincial Governors to emphasize that the moratorium on the issuance of new mining licenses is still in place.

Indonesia Requires Swab Tests for Foreigners Arriving at Soekarno-Hatta Airport

In an effort to help restore the national economy, the Indonesian Government, through the issuance of Director General of Immigration Letter No. IMI-UM.01.01-4047 (August 14, 2020), has relaxed the restrictions on the movement of foreigners into Indonesia, especially for expert foreign expatriates and heads of companies for the purpose of capital investment (hereinafter collectively referred to as “Foreigners”).

Indonesian Government Imposes VAT on Imported Digital Goods and Services

Indonesia’s Minister of Finance (“MOF”) recently issued a regulation on the imposition of value-added tax (“VAT”) on intangible taxable goods and services, including digital goods and services, from foreign technology companies that are utilized in Indonesia.

Indonesia’s New Data Protection Rules Move Toward Passage

After a number of data breaches underlined the urgency of comprehensive data protection rules, Indonesia expects to pass a data protection law in 2020, despite the ongoing COVID-19 pandemic and associated lockdowns.

New Normal: Indonesian Trade and Religious Ministries Issue Health Protocols for COVID-19 Pandemic

DKI Jakarta Governor Anies Baswedan has announced that his administration will slowly begin to lift the strict COVID-19 quarantine measures implemented in the province. June, the governor said, will be a transition period as DKI Jakarta begins to enter the “new normal”.

Indonesia’s OJK Issues Regulation on Quick Restructuring for Troubled Banks in Wake of COVID-19

The COVID-19 global pandemic has taken a toll on the Indonesian economy, underlining the need for financial institutions to have adequate liquidity in the face of uncertain times.

Homecoming Postponed by COVID-19: An Overview of Transport Restrictions in Indonesia During Idul Fit

Indonesia, the largest Muslim-majority country in the world, has a long tradition of millions of people traveling back to their home villages and hometowns for Idul Fitri, a custom known as mudik Lebaran.

Indonesia Issues Guidance for Online Licensing Service

The Indonesian Investment Coordinating Board (“BKPM”) on April 1, 2020, issued BKPM Regulation No. 1 of 2020 regarding Guidelines for the Implementation of Electronic Integrated Licensing Services (“BKPM Reg. 1/2020”).

Indonesian Government Relaxes Licensing Requirements for Medical Devices

Since the first COVID-19 case was reported in Indonesia on March 2, 2020, the number of cases has expanded to around 4,839 as of April 14, 2020, with 459 deaths. A number of medical professionals in the country have contracted COVID-19, in part due to a lack of medical devices to diagnose, treat or prevent the virus

Update on License for Companies in Indonesia to Operate During Pandemic

The Indonesian Ministry of Industry announced last week that industrial companies and/or companies located in industrial parks can continue to operate their factories and offices and maintain the movement of their workers, materials and finished products during the COVID-19 lockdown

IDX Issues New Listing Rule

The Indonesia Stock Exchange (IDX) has issued a new listing rule for shares and equity-type securities. The new rule provides new requirements for listing on the IDX and clarifies several items that are not clearly regulated under the old rule.

OJK Issues a Regulation on Fit and Proper Test Reassessment

On 27th December 2018, the Financial Services Authority issued OJK Regulation No. 34/POJK.03/2018 on Fit and Proper Test Reassessment for Primary Parties of Financial Services Institutions, which will become effective on 28 January 2019.

Background Checks Under Indonesian Employment Law

Employers in Indonesia frequently carry out background checks on applicants. Indonesian employment laws do not expressly regulate background checks. Certain background checks are in practice subject to the consent of the applicant.

Tax for E-Commerce Trade to be Set in April

The government recently issued a guideline to impose taxes on online transactions done through e-commerce platforms/businesses following the newly issued regulation on taxation for e-commerce trade. This new regulation is set to come into force on 1 April 2019.

The Cost of Corruption For Corporations in Indonesia

Almost immediately following the issuance of Supreme Court Regulation No. 13 of 2016 on Case Handling Procedures for Corporate Crimes in December 2016, the Corruption Eradication Commission named PT Nusa Konstruksi Enjiniring, Tbk, a publicly traded construction company, as a suspect in the corruption of a number of government construction projects.

PLN re-opens Prequalification Process for Indonesian Renewable Projects

Indonesia’s State-owned power utility, PT PLN (Persero) (PLN) has (again) invited renewable developers to submit applications to be included on the List of renewable projects.

Energy Ministry Issues Regulation on Rooftop Solar Power Systems

Under MEMR Regulation 49/2018, the construction and installation of a rooftop PV system require prior verification and approval from PLN. The verification and approval process involves the submission of an application to the head of the relevant PLN area/distribution unit, accompanied by the required administrative and technical information.

New Indonesian Manpower Regulation Changes Rules for Foreign Workers

The Indonesian Ministry of Manpower has issued MOM Regulation Number 10 of 2018 on Procedures for the Utilization of Foreign Workers.

Protection of Privacy in Indonesia

Article 28(G) is considered the basis for more specific data privacy legislation. However, there is no specific law in Indonesia that regulates respect for private and family life. As of the time of this writing, the most relevant regulations for the protection of privacy are related to personal data protection.

Facilitating Payments in Indonesia

Facilitating payments are not recognized under Indonesian law. Generally, there is no provision under the Anti-Corruption Law or in Indonesian law that permits facilitating payments or exempts such payments from the general prohibitions of the Anti-Corruption Law.

Voluntary Declaration of Royalties - Is It Necessary?

Royalties have been regarded as costs to be added to customs value - as long as the royalties meet all of the conditions set out in Law No. 10 of 1995 as amended by Law No. 17 of 2006 on Customs ("Customs Law") and its implementing regulation.

BKPM Stops Issuing Licenses

On 21st June, the government issued Regulation No. 24 of 2018 on Electronic Integrated Business Licensing Services. As a consequence, the BKPM will temporarily suspend the processing and issuing of licenses and will transition to a nationwide Online Single Submission system.

Terminating an Employment Relationship in Indonesia

Under Law No. 13 of 2003 regarding Labor (the “Labor Law”) and other prevailing labor laws and regulations, employment-at-will and termination upon simple notice are not recognized in Indonesia.

Shareholder Activism in Indonesia

While there is no specific definition of shareholder activism in Indonesia, and Indonesia does not recognise shareholder activism, the Indonesian Company Law (Law No. 40 of 2007 regarding Limited Liability Companies) gives certain rights to each shareholder and minority shareholder that allow them to influence the company's actions.

Indonesian Shipping Law – Marine Casualty

In the event of a ship collision, grounding or other major casualty, there are a number of key provisions in Indonesia that will impact upon the liability and response of interested parties.

Employee Data Privacy in Indonesia

The Indonesian Minister of Communication and Informatics (MOCI) relatively recently issued MOCI Regulation No. 20 of 2016 regarding the Protection of Personal Data in Electronic Systems (MOCI Reg 20), which stipulates the protections afforded to personal data stored in an electronic system.

Indonesia: What Licenses Can Still Be Processed at BKPM Post-OSS?

With the introduction of the Online Single Submission (OSS) system, as regulated under GR 24 of 2018, the issuance and supervision of a significant portion of capital investment licensing have been transferred from the Capital Investment Coordinating Board (BKPM) and other government agencies to the OSS system.

Indonesia Looks to Simplify Business Licensing With OSS System

As part of the push by the administration of President Joko Widodo to improve the ease of doing business in Indonesia and increase investment, the government has issued Government Regulation Number 24 of 2018 regarding Online Business Licensing Services (GR 24).

Franchise Agreements in Indonesia

A franchise, under Indonesian regulations, is defined as a special right owned by an individual or a legal entity to a unique business system that has proven successful in selling goods and/or services, and can be used by another party based on a Franchise Agreement.

Procurement Arrangements in the Indonesian Construction and Projects Sector

Under Indonesian Law No. 2 of 2017 (the “Construction Law”), procurement arrangements in Indonesia are made through the execution of a construction work contract between the project owner/employer and the service provider/contractor.

NIK New Development

The DGCE regulation requires a company to process the IMTA and NPWP for foreign directors not residing in Indonesia. Otherwise, a company’s NIK may be revoked by the DGCE.

New Government Regulation on Foreign Ownership in the Insurance Sector

The government issued new Government Regulation No. 14 of 2018 on Foreign Ownership Limitation in Insurance which supersedes and replaces previous government regulation in the insurance sector.

The New Tax Holiday Regulation of Indonesia

New Minister of Finance regulation offers more attractive corporate income tax reduction facilities for investors.

New Regulation in Managing Oil and Gas Working Areas with Expiring PSCs

The government has issued MEMR Regulation No. 23 of 2018, which states that a PSC Contractor does not automatically have the right to a PSC extension.

Bank Indonesia Sets New Limits for the Provision of E-Money

Bank Indonesia issued a regulation on e-money that stipulates a number of requirements and prohibitions that were previously unregulated.

Questions Remain Around Halal Certification Compliance in Indonesia

The Halal Law obliges all products in Indonesia to be halal certified by October 2019.

Government Pushes Draft Data Protection Law

The Government has issued a new draft personal data protection law, however, it is not in the 2018 National Legislation Program, but may still be prioritized this year or early next year.

Expanded Coverage and New Feed-in Tariff for Indonesia's Waste to Energy Projects

The government recently issued Presidential Regulation No. 35 of 2018 on the acceleration of development of waste to energy projects.

Indonesia's PLN Invites Hydropower Developers to Prequalify

Indonesia’s state-owned power utility PLN, has issued an invitation to hydropower developers to submit applications to be included on the List of Selected Providers for Indonesian hydropower projects with a capacity of above 10MW.

Coal Prices for Domestic Power Producers in Indonesia

With international coal prices rising, the government has by enacted MEMR Decree No. 1395 K/30/MEM/2018 to control the supply of coal for domestic power producers.

Foreign Employees and Termination Benefits in Indonesia

Supreme Court Circular Letter No. 1 of 2017 provides legal certainty that foreigners can only be employed in Indonesia under a fixed-term employment agreement for the period of their work permit. SEMA No. 1 eliminates any possible future claims that foreign employees are permanent employees and thus enjoy statutory termination benefits under the Manpower Law.

New Regulation on Marketing Authorization for Medical Devices and Supplies

The Minister of Health issued Regulation No. 62 of 2017 on Marketing Authorization for Medical Devices and Supplies to harmonize Indonesian regulations with ASEAN and global regulations on medical devices.

Indonesian Government Publishes 2017 Cost of Electricity Generation Figures

The Government recently issued Decree No. 1772 K/20/MEM/2018 which illustrate the costs to PLN of procuring power from the different systems/sub-systems throughout Indonesia.

New Abandonment and Site Restoration Obligations Upstream Oil and Gas Activities

Indonesia’s Minister of Energy and Mineral Resources has regulated abandonment and site restoration activities, or post-operation activities, for the upstream oil and gas sector.

Mandatory Disclosure of Beneficial Owners in Indonesia

Following the enactment of Presidential Regulation No. 13 of 2018, legal entities in Indonesia are now required to declare the identity of beneficial owners and provide information on their beneficial ownership.

Indonesia New Coal Pricing Regulation

Against a backdrop of rising coal prices, election-driven utility-price freezes, and a lower than expected uptick in electricity demand, the Government has introduced a new decree designed to cap coal prices for public interest electricity supply.

Limited Liability Companies Must Now Report Their Beneficial Owners

The President of Indonesia issued Presidential Regulation No. 13/2018 which aims to prevent and eradicate money laundering and terrorism financing crimes. This requires limited liability companies to reveal their beneficial owners.

Intangible Goods are Now Subject to Import Duty

The MOF Regulation No. 17/PMK.010/2018 on Stipulation of Goods Classification System and Import Duty on Imported Goods adds intangible goods to the Indonesian tariff system.

Virtual Currency Is Here, So How Is Indonesia Going to Regulate It?

As virtual currencies increasingly attract the interest of Indonesians for all kinds of reasons, there is no regulation in Indonesia that deals specifically with virtual currency, a gap regulators hope to close.

Data Categorization for Electronic System Operators Providing Public Services

The MOCI has issued a draft amendment to Government Regulation No. 82 of 2012 which requires electronic system operators providing public services to have onshore data centers and disaster recovery centers.

Current Policy on the Completion of Applications for Registration of Marks

DGIP issued Circular Letter No. HKI.4.UM.01.01-10 on Completion of Applications for Registration of Marks that speeds up the completion of applications to register marks that were filed before the enactment of Law No. 20 of 2016 on Marks and Geographical Indications.

Manpower Ministry Issues Regulation on Delegation of Licensing Authority to the BKPM

In December 2017, the Indonesian Ministry of Manpower issued Regulation No. 22 of 2017 on the Implementation of the One-Stop Integrated Service for the Manpower Sector at the BKPM.

Indonesian Manpower Regulation: New Procedure on Mandatory Employment Reporting

MOM Regulation No. 18 of 2017 was issued to improve the registration process and enhance legal protection for workers. For employers, this means new reporting procedures which includes online submission of manpower reports.

Gratification Control in BPOM Institution

On 10th October 2017, the Food and Drugs Supervisory Agency ("BPOM") issued Regulation No. 20 of 2017 on Control of Gratification in BPOM ("Regulation 20"), which took effect on 13thOctober 2017.

Tax Treatment for Oil & Gas Gross Split Production Sharing Contracts

The Indonesian government issued Government Regulation 53/2017 on the tax treatment for Gross Split PSCs, which is aimed at attracting more investors.

Employers Can No Longer Terminate Employees Who Are Married to Each Other

Employers in Indonesia previously had the right to terminate an employee having a marital bond and/or a blood relationship with another employee in the same company.

Data Protection Rules and Principles in Indonesia

Several obligations must be fulfilled by electronic system providers in Indonesia under MOCI Regulation No. 20 of 2016 to ensure that personal data is processed properly.

New Regulation on Capital Investment Implementation Monitoring

On 4 December 2017, the Head of BKPM issued Regulation No. 14 of 2017 on Guidelines and Procedures for Capital Investment Implementation Monitoring.

New Regulation on Criteria and Drug Registration Procedure

BPOM Regulation No. 24 of 2017 replaces previous BPOM regulations in setting out the latest procedure for drug registration.

New Regulation on Capital Investment Licensing and Facilities Implementation

To implement Government Regulation on the Acceleration of Business Implementation, the Head of BKPM issued Regulation No. 13 of 2017 on Guidelines and Procedures for the Implementation of Capital Investment Licensing and Facilities.

Indonesian Central Bank Regulates Financial Technology

Indonesia’s central bank issued BI Regulation No. 19/12/PBI/2017 regarding the Provision of Financial Technology, to regulate the implementation of fintech to foster innovation, ensure consumer protection, and manage risk.

Joint Ventures in Indonesia

Various regulations govern the terms that can be included in joint venture agreements in Indonesia.

New Guidelines on the Advertising of Drugs

The Food and Drugs Supervisory Agency has issued Decision No.8 setting out the guidelines on the advertising of prescription and non-prescription drugs.

Updates on The Halal Law: Wait & See

The Halal Product Assurance Implementing Board was recently established but will only handle halal certification applications in 2019. However, since the Halal Law is not effective yet, the Indonesian Ulema Council still holds the authority to handle halal certification in Indonesia.

Procedures for Land Freezes and Land Seizures in Indonesia

Head of National Land Agency Regulation No.13 of 2017 covers the different land freeze and seizure procedures previously governed by several different regulations.

Bank Secrecy and Data Protection in Indonesia

Banks in Indonesia and their affiliates are required to keep confidential information regarding its depositing customers as well as any sum deposited by such customers.

Data Protection in Indonesia’s Financial Services Sector

Minister of Communication and Informatics Regulation No.20 of 2016 strengthens the obligations to protect the personal and financial data of consumers by providers of electronic systems.

Ministry of Trade Simplifies Import Provisions of Iron, Steel, and their Derived Products

The Ministry of Trade Regulation No. 63 of 2017 amended the Regulation No. 82 of 2016 on the Import Provisions Iron, Steel, Alloy Steel and Their Derivative Products.

PLN Invites Blanket Prequalification for Indonesian Renewable IPPs

PLN has recently issued an invitation for prequalification of developers interested in participating in future renewable Independent Power Projects in Indonesia.

Ministry of Agriculture Issues New Regulation on Milk Supply & Distribution

Minister of Agriculture Regulation No. 26 of 2017 regulates milk supply and distribution in order to increase national milk production.

Impact on Project Lenders of New Shareholding Rules for Indonesian IPPs

On 3rd August 2017, the MEMR revoked Reg. 42 and replaced it with Regulation No. 48 of 2017 on Supervision on Business Activities in Energy and Mineral Resources Sector.

Seaports in Indonesia: Regulatory Developments

A number of regulations have been issued that are significant for the regulatory development of Indonesia’s seaports sector. These include Ministry of Transportation Regulations No. 71, 134, and 146 of 2016.

New Rule: Ministry of Trade to Confirm Taxpayer Status Before Issuing Licenses

The Ministry of Trade issued regulation No. 44 of 2017 which requires the ministry to confirm the taxpayer status of a business before the issuance of certain licenses.

The Indonesian Government Resumes Discussions on Over-The-Top Regulation

The 2017 Draft OTT Regulation intends to force Over The Top application and content service providers to establish presence in Indonesia, to protect public interest and ensure certainty of consumer protection.

Indonesia Launches New Economic Policy Package

On 31st August 2017, President Joko Widodo enacted the 16th economic policy package, which aims to improve the ease of doing business in Indonesia by providing measures to accelerate issuance of business licenses and permits at the central and regional levels.

Anti-Corruption Developments in Indonesia

Indonesia has seen an increase in the number of cases processed by the KPK and have had three new anti-corruption regulations enacted since 2016.

New Minister of Employment Regulation Obliges Employers to Prepare and Inform Employees about a Wage

The Indonesian Ministry of Employment (MOE) has issued MOE Regulation No. 1 of 2017 which obliges employers to prepare and inform employees about wage structure and scale.

Requirements for Changing Shareholders and Board Members for Mining Companies

MEMR issued Regulation No. 48 of 2017 on Supervision in the Energy and Mineral Resources Sector ("Reg. 48"), which governs procedures for changes of shareholdings and board of directors and board of commissioners members in power, geothermal, oil and gas, and mining companies.

The OJK Issues New Circular Letter on Periodic Reports

The Financial Services Authority issued Circular Letter No. 55/POJK.55/2017 on Periodic Reports of Insurance Companies, which applies to all reports that must be submitted by a range of companies involved in the insurance and reinsurance sector.

Government to Approve Corporate Actions in the Indonesian Energy Sector

The Indonesian Minister of Energy and Mineral Resources (“MEMR”) has issued MEMR Regulation No. 42 of 2017 which aims to improve the supervision of business entities in the energy and mineral resources sector in part by closing regulatory gaps.

ESDM Regulation 42 and Oil and Gas Companies

On 14th July 2017, the Minister of Energy and Mineral Resources published Regulation No. 42 of 2017 (Reg. 42). The share transfer/change in control and change of director provisions of Reg. 42 apply to upstream and downstream oil and gas companies, IUPTL holders (power producers) and IPB holders.

Indonesia Takes Steps to Ease Licensing Process for Trade Companies

The Indonesian Ministry of Trade (“MOT”) has issued two regulations, MOT Reg. No. 7/M-DAG/PER/2/2017 and MOT Reg. No. 8/M-DAG/PER/2/2017, with the goal of simplifying the licensing process for companies.

Approvals Required for Changes in Shareholding and Board Members of Power and Geothermal Companies

These contractual requirements imposed on IPPs by PLN related to retention of ownership of shares in IPP companies. Aside from contractual restrictions associated with changes in shareholding, neither the PPAs nor the power sector regulations imposed any other restrictions on corporate actions of IPP companies.

Indonesian Oil and Gas Sector: Foreign Investment and Dispute Resolution

As a matter of international law, international treaties and other multinational agreements are binding upon the state upon ratification. Ratification of such international instruments is normally done by way of a presidential regulation, which will be further implemented by a ministerial regulation.

Government Agrees to Increase Tariffs for Indonesian Hydro Developers

The Indonesian Government introduced Minister of Energy and Mineral Resources Regulation No. 12/2017 which imposed maximum ceiling tariffs for the full range of renewable technologies.

The Development of Personal Data Protection in Indonesia

After months of drafting and deliberation, Indonesia’s Ministry of Communication and Informatics (“MOCI”) in late 2016 issued a long-awaited regulation on the protection of personal data.

Customs Office Requires Work Permit for Foreign Directors for NIK Applications

All importers and exporters operating in Indonesia that intend to apply for, amend or renew their Customs Registration Number ("NIK") now need to ensure that their foreign directors have work permits ("IMTA"); and provide a copy of the IMTA to DGCE with the NIK application.

Oil and Gas Transportation and Infrastructure in Indonesia

Gas transportation by pipeline in Indonesia is regulated under Government Regulation No. 36 of 2004 (“GR 36”) regarding Upstream Oil and Natural Gas Business Activities has been amended by Government Regulation No. 30 of 2009.

Insurance Companies in Indonesia Must Appoint Controller

Indonesia’s Financial Services Authority has issued a regulation that requires insurance companies in Indonesia to appoint a controller by June 2017 at the latest. OJK Regulation No. 67/POJK.05/2016 requires insurance companies to report the appointment of a controller to the OJK, as required by the Insurance Law.

Insurance Companies Must Follow Requirement on Ultimate Shareholders

The Indonesian Insurance Law introduced a significant change regarding the shareholding composition of insurance companies. The Insurance Law mandates that the local shareholders in an insurance company must be ultimately owned by Indonesian individuals.

Bankruptcy Law and Suspension of Debt Payments in Indonesia

In 2016, the Supreme Court issued Circular Letter No. 2 of 2016 regarding Enhancement of Efficiency and Transparency in Handling Bankruptcy and PKPU Cases in Court.

Restrictions on Contractors in the Indonesian Oil and Gas Sector

There are a number of rules for Production Sharing Contract (“PSC”) Contractors in Indonesia’s oil and gas sector, including those on the export of production, currency exchange and the transfer or disposal of development rights.

Indonesia Extends Cabotage Exemption

The Indonesian Shipping Law and its implementing regulations contain Indonesia's cabotage rules, requiring that domestic sea transportation be carried out by an Indonesian shipping company using an Indonesian-flagged vessel and an Indonesian crew.

The OJK Issues New Circular Letter on Micro-insurance Products

Circular Letter 9, while not in the form of an OJK regulation, now prescribes a detailed manner and approach to the distribution and sale of micro-insurance products.

The OJK Issues New Regulation on Administrative Sanctions

On 25th April 2017, the Financial Services Authority issued Regulation 17/POJK.05/2017 (Regulation 17) on Guidelines on Administrative Sanctions in the Insurance Sector and Freezing of Assets of Insurance Companies, Shariah Insurance Companies, Reinsurance Companies and Shariah Reinsurance Companies.

Indonesian Oil and Gas Sector: Role of the State

Under the Oil and Gas Law, entities in the form of a state-owned enterprise, regional-owned enterprise, a cooperative, small business or private business entity may enter into a PSC to undertake upstream oil and gas business activities.

New OJK Rule on Public Accountants and Public Accountant Offices

The issuance of this new rule has an impact on the engagement of external auditors by publicly-listed companies given that public companies are one of the subjects being regulated and supervised by OJK.

Development of Oil and Natural Gas in Indonesia

Indonesia’s oil and gas sector is governed by Law No. 22 of 2001 regarding Oil and Gas. The oil and gas sector comprises of upstream and downstream activities, which are separately regulated and organised.

Indonesia’s New Construction Law: Changing the Regulatory Framework

The Government of Indonesia recently issued Law No. 2 of 2017 regarding Construction Services. The New Construction Law introduces several changes and new provisions related to construction services in Indonesia.

New Online Registration System Transforms Franchise Application Process

The Ministry of Trade ("MOT") has introduced a new platform for the registration of a number of licenses including the franchise registration certificate. The system is launched based on MOT Regulation No. 85 and MOT Regulation No. 86.

PLN's 2017-2026 Electricity Supply Business Plan Issued

The Minister of Energy and Mineral Resources has approved the 2017-2026 Electricity Supply Business Plan (RUPTL) of the national power utility, PT PLN (Persero). The RUPTL in essence represents PLN's plan to procure electricity from private Independent Power Producers.

OJK Issues Amendment on Conducting Shareholders Meetings for Public Companies

On 14th March 2017, the Financial Services Authority (Otoritas Jasa Keuangan - "OJK") issued OJK Rule No. 10/POJK.04/2017. While generally there is no significant change in the procedures for convening a General Meetings of Shareholders, there are two new provisions which have been introduced.

OJK Issues Rule on Reporting of Share Ownership in Public Companies

On 14th March 2017, the Financial Services Authority ("OJK") issued OJK Rule No. 11/POJK.04/2017 on Reporting of Share Ownership in Public Companies. Similar to the previous rule, the following parties need to file a share ownership report to OJK.

Bank Indonesia Issues Rules for Payment System Service Providers

Bank Indonesia (“BI”) has issued BI Circular Letter No. 18/41/DKSP on licensing procedures and requirements related to payment system transactions in Indonesia. The Circular Letter mainly concerns licensing procedures and requirements set by BI for various Payment System Service Providers.

Management of Personal Data: What Companies in Indonesia Should Know

The management of personal data under Indonesian law is largely consent-based. This consent must be given in writing by the owners of the personal data, either manually or electronically, after the owners are given a full explanation of any actions that will be taken in regards to their personal data.

New Regulation on Trademark Registration and Criteria on Well-Known Trademark

Regulation 67 became effective on 30th January 2017 and provides more detailed provisions on trademark registration procedures criteria to determine the similarity of goods/services as well as criteria on well-known trademarks. Regulation 67 does not clearly revoke Government Regulation No. 23 of 1993.

Indonesia Regulates Gross Split Production Sharing Contracts for Oil and Gas

MEMR Reg. 8/2017 regulates a type of oil and gas cooperation contract called a gross split production sharing contract (“Gross Split PSC”). Gross Split PSC applies for both conventional and non-conventional oil and gas.

Data Protection in Indonesia

There are various laws that relate to data privacy in a number of specific areas although there is no comprehensive data protection law in Indonesia. Indonesian legal scholars often refer to Article 28(g) of the 1945 Constitution as the basis (albeit rather vague basis) for more specific data privacy legislation.

The OJK Issues New Regulation on Good Corporate Governance

On 23rd December 2016, the Financial Services Authority ("OJK") issued Regulation 73/POJK.05/2016 on Good Corporate Governance ("GCG") for Insurance Companies ("Regulation 73"). Regulation 73 became effective on 28th December 2016.

Indonesian Government Puts the Squeeze on Renewable Energy Tariffs

Regulation of Minister of Energy and Mineral Resources No. 12/2017 on the Utilisation of Renewable Energy Resources for Electricity Supply now sets out the tariff framework for several types of renewable energy projects.

(Not So) New Regulation on Divestment

Minister of Energy and Mineral Resources ("MEMR") Regulation No. 9 of 2017 further regulates the divestment process for the downstream mining industry in particular to the price at which the government will pick up shares. The regulation replaces MEMR regulation No. 27 of 2013 to the extent of the divestment provisions.

Guide to Benefits in Indonesia

In 2011, the Indonesian government reformed its National Social Security System and passed Law No. 24 on the Social Security Organising Body to help meet the basic needs of the country’s population. Companies in Indonesia are required to register employees in the Indonesian government’s employment social security programmes.

New Regulation for Indonesia’s Downstream Mining Industry

The Government of Indonesia began 2017 by issuing Government Regulation No. 1 of 2017 regarding the Fourth Amendment to Government Regulation No. 23 of 2010 regarding the Implementation of Mineral and Coal Mining Business Activities.

Bankability Concerns Over New Generation of Indonesian Power Purchase Agreements

The Ministry of Energy and Mineral Resources on 19th January 2017 issued Regulation No. 10/2017 on Principles of Power Purchase Agreements, which, for the first time in any material way, seeks to impose certain requirements as to what provisions must be built into PPAs in the power sector.

New Regulation in Indonesia Amends the Facilities Requirements for PPP

Indonesia’s Ministry of Finance (“MOF”) recently issued MOF 129/2016 amending MOF 265/2015 and introduces several new provisions. The newly-issued MOF 129/2016 introduces additional provisions with the stated aim of improving efficiency and effectiveness.

New OJK Regulation on Licensing of Insurance and Reinsurance Companies

On 23rd December 2016, the Financial Services Authority issued Regulation No. 67/POJK.05/2016 on Licensing and Institution of Insurance Companies, Syariah Insurance Companies, Reinsurance Companies and Syariah Reinsurance Companies. The regulation became effective on 28th December 2016.

New Export Regulations: The Re-Emergence of Resource Nationalism?

The Indonesian government introduced three new regulations that allow for the exports of certain amounts of mineral concentrates, the conversion of Contracts of Work holders into IUPKs, and for every producing mine in Indonesia to be majority Indonesian-owned.

New Importation of Consigned Goods Regulation

In late 2016, the Indonesian government issued Regulation No.182/PMK.04/2016 on the Importation of Consigned Goods ("New Regulation"). Consigned goods were previously regulated under the Ministry of Finance Regulation No. 188/PMK.04/2010. The law will become effective on 28th January 2017.

The OJK Issues Regulation on Implementation of Insurance and Reinsurance Companies

On 23rd December 2016, the Financial Services Authority issued Regulation No. 69/POJK.05/2016 which became effective on 28th December 2016, providing more comprehensive provisions on certain aspects of running an insurance business.

New Implementing Regulation on Personal Data Protection

The Minister of Communication and Informatics has issued Regulation No. 20 of 2016 on Personal Data Protection in Electronic Systems which became effective on 1st December 2016. The regulation provides new measures to the current personal data protection provisions in Indonesia.

Launching of Electronic-Based Intellectual Property Services in Indonesia

The Ministry of Law and Human Rights officially launched electronic- based intellectual property services on 29th December 2016. The electronic filing system enables IP consultants to file applications at any time online without being constrained by the limited opening hours of the Intellectual Property Office.

BKPM Supports Indonesian Tax Amnesty Programs by Issuing a Facilitating Regulation

On 28th October 2016, the Head of the Capital Investment Coordinating Board issued Regulation No. 8 of 2016 ("Regulation 8"), which immediately went into effect. Regulation 8 was issued to support the tax amnesty programmes initiated by the Indonesian government.

A Look at New Requirements for Pharmaceutical/Healthcare Companies on Sponsorship

On 8th November 2016, the Minister of Health issued Regulation No. 58 of 2016 on Sponsorship for Healthcare Professionals ("Regulation 58"), which took effect on 29th November 2016. Under Regulation 58, both givers and receivers must report to the Corruption Eradication Commission.

New Law Introduces Trademark Filing Procedure and Renewal Grace Period

The new Trademark and Geographical Indication Law has recently been introduced as Law No. 20 of 2016. This new law became effective on 25 November 2016.

New Regulation Allows Appointment of ROEs for Construction Projects

The Indonesian government recently issued Government Regulation No. 54 of 2016 regarding the Third Amendment to Government Regulation No. 29 of 2000. The newly-issued Third Amendment introduces a provision that allows Regional-Owned Enterprises the same treatment as State-Owned Enterprises.

Indonesian Employment Law Update: Minimum Wage

The Governor of Jakarta has issued a new regulation on the minimum wage for 2017, as stipulated under Regulation No. 227 of 2016 (Reg. 227). Under Reg. 227, companies in Jakarta are prohibited from paying workers less than 3,355,750 IDR per month.

Key Features of the Draft New Law on the Supervision of Food and Drugs

The Indonesian government is currently discussing the Draft Law on Food and Drugs Supervision, which incorporates a total of 105 Articles setting out a comprehensive arrangement of provisions related to the supervision of food and drugs.

Distributing Goods in Indonesia: What Are the Rules?

Indonesia’s Ministry of Trade (“MOT”) recently issued a regulation on the distribution of goods. MOT Regulation No. 22/M-DAG/PER/3/2016 regarding General Provisions on the Distribution of Goods stipulates that goods can be distributed directly or indirectly to consumers within Indonesia.

Indonesia's FinTech Office and New FinTech Regulation

Bank Indonesia recently launched a FinTech Office on 14th November 2016. The office is expected to boost the growth of the Indonesian FinTech industry, optimise technology developments in the sector, improve the industry's competitiveness and provide feedback from business players.

Indonesia: New Intellectual Property Tariffs

On 31st October 2016, the Indonesian government issued Government Regulation No. 45 of 2016 on types and tariffs of non-tax state revenue applicable to the Ministry of Law and Human Rights. The enactment of GR 45/2016 changes some of the official tariffs at the Directorate General of Intellectual Property of Indonesia.

New Regulation on Foreigners Owning Property - What You Need To Be Aware Of

On 19th September, the Minister of Agrarian Affairs and Spatial Planning/Head of National Land Agency issued Regulation 29 on Procedure for Granting, Releasing, or Transferring Land Rights over Residential Houses to Foreign Nationals in Indonesia.

Amendment to Law No. 11 of 2008 on Electronic Information and Transactions

On 27th October 2016, the Indonesian Parliament amended Law No. 11 of 2008 on Electronic Information and Transactions. The amendments in the Amendment Law are not substantial and are related to a few concepts and existing provisions in the EIT Law.

Halal Implementing Regulations - Where are They at Now?

The Halal Product Assurance Law needs around 20 implementing regulations which must be issued within two years after 17th October 2014. The Halal certification obligation under the Halal Product Assurance Law will become mandatory 5 years after 17th October 2014.

Indonesian Legal Review: Seaports

The Government of Indonesia has over the past year issued several regulations of note on seaports. Among these regulations include Ministry of Transportation Regulation No. PM 15 of 2015 and Government Regulation No. 61 of 2009.

Update on Import Regulations for Indonesia

Indonesia’s Ministry of Trade recently issued new regulations that affect the rules for importing beverages, cosmetics, electronics, used capital goods and horticultural products. Among these include MOT Regulation No. 87/2015 regarding Provisions on the Import of Certain Products.

Enactment of the New Trademark and Geographical Indication Law

Indonesia recently enacted the new Trademark and Geographical Indication Law which will replace Law No. 15 of 2001. The new law will provide protection to broader types of trademark, as well as make it more time and cost-efficient for trademark owners to obtain registration licences in Indonesia.

Indonesia: Transitional Period for Patent Maintenance Fee Payment

Following the enactment of Law No. 13 of 2016 on Patent, the Ministry of Law and Human Rights recently issued Circular Letter No. HKI-3-08.OT.02.02 of 2016 on the Transitional Period of Patent Maintenance Fee Payment from the old Patent Law.

A Look at Indonesian Trade Regulations on Importer Identification Numbers

The MOT has revoked the requirement for importers to obtain a Special Importer Identification Number for the import of certain products such as textiles, shoes and electronics. The provisions on Importer Identification Number are now regulated under MOT Regulation No. 70/2015, which became effective on 1st January 2016.

BPOM Simplifies Drug Registration Process

On 4th August 2016, the Food and Drug Supervisory Agency enacted a new regulation which changes the registration process of drugs. The changes are reflected in Head of BPOM Regulation No. 17 of 2016 on the Second Amendment of Head of BPOM Regulation No. 3 of 2011.

Terms of BKPM's Principle Licenses and Business Licenses

The Indonesian Capital Investment Coordinating Board recently announced the terms of principle licenses and business licenses. The announcement was said to be effective as of 30th September 2016.

New Indonesian Mine Mouth Coal Pricing Regulation

On 6th September 2016, the Minister of Energy and Mineral Resources issued Regulation No. 24 of 2016 on mine mouth coal pricing. This amends the existing Regulation No. 9 of 2016 on the Procedures for the Supply and Determination of Coal Price for Mine Mouth Power Plants.

New Regulation on Purchase of Electric Power from Biomass and Biogas Power Plants

On 4th August 2016, Ministry of Energy and Mineral Resources Regulation No. 21 of 2016 on the Purchase of Electric Power from Biomass and Biogas Power Plants was enacted. Business entities intending to develop and operate biomass and biogas power plants must first secure a stipulation as the developer of a biomass and biogas power plant.

BANI Duality: Between the "Original" and the "Renewed" One

On 8th September 2016, BANI Pembaharuan or Renewed BANI was launched in Indonesia. Its name is very similar to that of the already existing arbitration centre, BANI. Up to now, BANI has been regarded as the most prominent Indonesian arbitration institution.

How Circular Letter on New Fit and Proper Test Rules Affects Insurers

On 30th August 2016, the Financial Services Authority issued Circular Letter No.31/SEOJK.05/2016 on Fit and Proper Test for Financial Services Institutions Primary Parties which took effect on the same date. Insurance companies that are in the midst of preparing a FPT application will need to restart the application process.

OJK Issues New Rule on Annual Reports of Listed and Public Companies

The Financial Services Authority recently issued a new rule on annual reports for listed and public companies. To implement this new rule, on 3rd August 2016, OJK issued OJK Circular Letter No. 30/SEOJK.04/2016.

The First Bancassurance Regulation from the Insurance Arm of the OJK

On 30th August 2016, the Financial Services Authority issued Circular Letter No. 32/SEOJK.05/2016 on the distribution channel of insurance products in cooperation with banks. The regulation came into effect on 1st September 2016.

New Incentives for the Development of Solar Photovoltaic Plants

To support the development of power plants in Indonesia, the government has introduced regulation MEMR No. 19/2016, which is intended to boost the country’s electricity capacity and help achieve its national energy policy target.

Recent Legal Developments in the Indonesian Real Estate Sector

The issuance of Presidential Instruction 3/2016 followed the announcement of the government’s “one million houses” programme aimed at building a million houses for lower-income families. Following its issuance, developers reported the same challenges in obtaining the necessary licenses.

Public-Private Partnerships in Indonesia

To encourage investors to develop infrastructure projects using the PPP approach, PR 38/2015 allows government support in the form of what is called Viability Support, which is a financial contribution granted by the government.

Real Estate Disputes in Indonesia

There is no arbitration facility or process specifically designed to accommodate real estate matters under Indonesian law. Disputes related to real estate are treated in a similar manner as any other dispute in Indonesia.

Downsizing in Indonesia

There has been considerable confusion about whether employers in Indonesia are allowed to downsize a part of their workforce for efficiency reasons. Law No. 13 of 2003 regarding Employment allows a company to terminate employees when closing the company for efficiency reasons.

Indonesia: The Enactment of the New Patent Law

This new Patent Law will replace Law No. 14 of 2001 on Patents, and may come into effect at the end of August 2016. The new Patent Law will provide patent holders with some solutions to the shortcomings of the current patent framework and registration procedures.

OJK Rule on Capital Market Investment Products Supports Tax Amnesty Law

The recently issued OJK Rule No. 26/2016 reduces the regulatory requirements for some capital market investment products so that Indonesian investors relying on the Tax Amnesty Law would consider investing their funds in those investment products.

How Insurers are Affected by The New Fit and Proper Test Regulation

The Financial Services Authority issued Regulation No. 27/POJK.03/2016 on Fit and Proper Test ("FPT") which took effect on 1st August 2016. The Regulation aims to harmonise all FPT requirements for Financial Services Institutions.

Franchise Law in Indonesia

When the government introduced a number of recent economic policy packages in an effort to stimulate the economy, none of the policy packages focused on the franchising sector. The fact that no regulatory change occurred is noteworthy.

What You Need to Know about Indonesia’s New Tax Amnesty Law

The Indonesian Government recently issued the long-awaited and anticipated Tax Amnesty Law (Law No. 11 of 2016). The Tax Amnesty Law eliminates the principal tax debt and administrative sanctions as well as providing no-examination of tax crimes.

Environmental Law in Indonesia: Recent and Possible Future Changes

Indonesian President Joko Widodo has strengthened regulatory and enforcement functions in the environmental sector by integrating two previously separate but interlinked departments to become the Ministry of Environment and Forestry.

Indonesia Introduces New Solar Power Regime

In 2013, the Indonesian government first introduced a solar power regulatory regime which required the government to publish solar power quota allocations for various parts of Indonesia. However, the Indonesian Supreme Court struck down this 2013 framework as being inconsistent.

Whistleblowing and Indonesian Employment Law: Rules for Companies

Whistleblower protections in Indonesia primarily relate to criminal matters. The main legislation related to whistleblowers is the Witness and Victim Protection Law. However, companies inquire whether there are any whistleblowing rules under the Employment Law.

OJK's New Rule on Mutual Funds in the Form of Collective Investment Contracts

To increase the development of mutual funds in Indonesia, increase investor protection, and keep up with the developments in market practice, on 19th June 2016 the Indonesian Financial Services Authority ("OJK") enacted OJK Rule No. 23/POJK/.04/2016 on Mutual Funds.

In Indonesia, New Licensing Rules for Imports and Exports

The Government of Indonesia has recently issued a package of economic policies designed to remove irrelevant requirements and to deregulate and spur the growth of the Indonesian economy. This move has resulted in the elimination of several examination and licensing procedures.

OJK Revokes Stimulus Package for Insurance Companies and Pension Funds

On 31st August 2015, the Financial Services Authority issued several circular letters as a stimulus policy package to minimise the detrimental effects of unstable global financial conditions on the insurance and pension fund business sector.

A Look at Bank Indonesia Regulations on Use of Rupiah One Year On

The purpose of the BI Regulations on the rupiah was to stabilise the exchange rate in the face of ongoing depreciation of the currency.

Taking the Temperature of Indonesia’s Geothermal Regulatory Climate

Indonesia’s geothermal resources are among the largest in the world, with around 40 percent of the global geothermal resources, and the government has intensified its efforts to encourage geothermal power development.

PLN Issues 10-Year Electricity Supply Business Plan (RUPTL) for 2016-2025

The Electricity Supply Business Plan for 2016-2025 of the Indonesian state-owned power utility firm, PT PLN (Persero), has been issued and approved by the Minister of Energy and Mineral Resources through Decree No. 5899K/20/MEM/2016.

Indonesia's Company Law and Changes to Corporate Organs

Indonesia’s Company Law (Law No. 40 of 2007 regarding Limited Liability Companies) regulates how companies operate their corporations in Indonesia. The Company Law has not been amended since it was enacted in 2007.

Indonesia’s New Negative Investment List: What Changes, What Stays the Same?

The 2016 Negative Investment List (“2016 DNI”) liberalises some areas of foreign investment in Indonesia, including foreign investment from ASEAN countries. It is also true that the 2016 DNI does not contain the dramatic changes that had been anticipated by some members of the foreign investment community.

What is Going on with Indonesia’s Bilateral Investment Treaties?

Indonesia’s international investment policy has been in the spotlight since the Government of Indonesia conveyed in 2014 its intention to terminate all of its existing bilateral investment treaties.

Indonesian Employment Law: National Holidays, THR & Employees with Disabilities

The Minister of Religious Affairs, Minister of Manpower and Minister of State Apparatus Empowerment and Bureaucratic Reform have issued a joint decision on National Holidays and Collective Leave in 2017.

A Look at Indonesian Bankruptcy Law

Law No. 37 of 2004 regarding Bankruptcy and Suspension of Debt Payment Obligations sets forth the requirements for filing a bankruptcy petition. The essential requirement is that there must be two or more creditors and at least one mature but unpaid debt for a bankruptcy action to be initiated against a debtor.

Regulatory Developments in the Indonesian Banking Industry

The Financial Services Authority has had regulatory authority over Indonesian banks, except Bank Indonesia (“BI”), since 31st December 2013, as stipulated under Law No. 21 of 2011 regarding the Financial Services Authority. BI is Indonesia’s central bank and maintains jurisdiction over the monetary supply.

Indonesia Foreign Investment - The 2016 Negative List

The government has enacted a new Negative Investment List under Presidential Regulation No. 44 of 2016, which became effective on 18 May 2016 and revokes the previous Negative Investment List stipulated under Presidential Regulation No. 39 of 2014.

New Indonesian Mine Mouth Coal Pricing Regulation Introduces Pricing Flexibility

On 4th April 2016, the Minister of Energy and Mineral Resources issued a new regulation on coal pricing for mine mouth power projects, Regulation No. 9 of 2016 on the Procedures for the Supply and Determination of Coal Price for Mine Mouth Power Plants.

New Body Set Up to Resolve Disputes in Indonesia’s Construction Sector

The Indonesian Centre for Arbitration and Alternative Dispute Resolution for Construction (BADAPSKI) in late 2015 held its first seminar to announce its existence as a dispute resolution body in the field of construction in Indonesia.

Indonesia’s Anti-Monopoly Law: Changes Ahead?

The Indonesian government views that the current Anti-Monopoly Law no longer fulfills the need to create a more established competitive regime in Indonesia. As such, it has introduced a draft version of a new Anti-Monopoly Law that brings about several major changes.

Regulatory Framework for Indonesian Airport Business Activities

The regulation of airports is under the jurisdiction of the Ministry of Transportation (MOT). The most recent basic regulation on airport business activities is MOT Regulation No. 69 of 2013. In general, MOT Reg. 69/2013 was issued to set out the functions, hierarchy and classification of airports.

Regulating E-Commerce for a Digital Future

Business actors in Indonesia often raise the question whether there are any Indonesian legal restrictions on digitalising their businesses through websites or mobile applications. There is no specific Government of Indonesia law or regulation that deals with e-commerce activities in any depth or detail.

New OJK Rule on Guidelines for Managing Real Estate Investment Trusts

To boost the real estate investment trust market in Indonesia, the Financial Services Authority ("OJK") has issued OJK Regulation No. 19/POJK.04/2016 on Guidelines for Investment Managers and Custodian Banks that Manage Real Estate Investment Funds in the Form of a Collective Investment Contract.

Indonesia’s Economic Stimulus Packages

Between September 2015 and March 2016, the Indonesian central government released 11 economic stimulus packages, which taken together are known as Jokowi’s Economic Package (Paket Kebijakan Ekonomi Jokowi). The following is a summary of the packages that have been released as of this article.

New Ministry of Employment Regulation on Religious Festivity Allowance

On 8th March 2016 the Minister of Employment issued Regulation No. 6 of 2016 on Religious Festivity Allowance for Employees in Companies. The regulation replaces Regulation No. PER-04/MEN/1994 of 1994 on the same matter.

Proposal to Revoke Five Business Permits in Indonesia

On 16th March 2016, Indonesian President Joko Widodo announced a plan to simplify business licensing in Indonesia by revoking five existing business permits issued at the regional level.

General Meeting of Shareholders in Indonesia

Limited liability companies in Indonesia must hold an annual general meeting of shareholders (AGMS) at least six months after the end of their financial year. The AGMS must discuss and approve the annual report submitted by the Board of Directors, which must consist of a financial report among other details.

Licensing of Insurance and Reinsurance Providers in Indonesia

Insurance and reinsurance companies doing business in Indonesia must be licensed by the Financial Services Authority (OJK). The OJK must approve or reject the license application no later than 30 days after the complete application is received.

A New Regulation on Intellectual Property License Agreement Recordal

The prevailing intellectual property laws in Indonesia stipulate that it is mandatory to record an IP license agreement with the Directorate General of IP. In the absence of recordal, an IP license agreement is deemed to be not binding on any third party.

Indonesian Regulatory Framework for Real Estate Investment Funds

In late 2015, the Indonesian Minister of Finance issued a regulation to encourage the growth of real estate investment funding in the form of Collective Investment Contracts.

The Tenth Economic Package – Principles for the New Negative List

On 11th February 2016, the Government announced a tenth economic package. The announcement outlines the principles that will be adopted in the new Presidential Regulation on Negative List of Investments in Indonesia.

New Presidential Regulation to Accelerate 35GW Power Generation Programme

Through the recent issue of Presidential Regulation No. 4 of 2016 on Acceleration of Power Infrastructure Development, Indonesia appears set to address the bottlenecks that have been holding back the progress of power generation projects.

Structuring Issues for Insurance Firms After Enactment of Law No. 40 of 2014

The Insurance Law, enacted in 2014, introduced various new provisions; among others, the concept of a controller being held liable for an insurance company's liabilities, the spinning off of sharia business units, and the requirement that the Indonesian shareholder must be an Indonesian citizen.

Indonesia Readies New Negative Investment List: What Should Investors Expect?

According to numerous media reports, the Indonesian government is in the process of revising the Negative Investment List, commonly known as the DNI, as contained in Presidential Regulation No. 39 of 2014.

Fiduciary Security Registration in Indonesia

The Indonesian government has issued Government Regulation No. 21 of 2015 regarding Procedures to Register Fiduciary Security and Fees to Draw Up a Fiduciary Security Deed (“GR 21/2015”). GR 21/2015 revokes GR No. 86 of 2000 regarding the same topic.

Ownership of Homes or Residences by Foreigners in Indonesia

In seeking to address previously ambiguous legislation, Indonesia’s government has introduced a new regulation which stipulates that foreigners who hold a legal stay permit are allowed to own homes and apartment units in Indonesia.

New OJK Rules on Rights Issues and Prospectuses for Rights Issues

On 22nd December 2015, the Indonesian Financial Services Authority ("OJK") issued OJK Rule No.32/POJK.04/2015 and OJK Rule No.33/POJK.04/2015 which together introduced several significant changes to rights issues in Indonesia.

OJK Raises Corporate Governance Standards Imposed on Public Companies

The Indonesian Financial Services Authority (Otoritas Jasa Keuangan, or OJK) enacted a rule on the implementation of public companies' corporate governance guidelines which set a new standard of corporate governance practice for public companies.

Indonesia Restores Capability of Manufacturers to Import Manufactured Products

On 23rd December 2015, the Ministry of Trade finally issued a regulation which restores the capability of holders of Producer Importer Identification Numbers to import manufactured goods as complementary goods, test market goods, and goods for after-sales services.

Government Introduces Regulatory Framework on Bonded Logistics Centres

As part of the second economic stimulus package introduced by the government last September aimed at boosting the country's economy, the government issued Government Regulation No. 85 of 2015 which amends Government Regulation No. 32 of 2009 on Bonded Storage Places ("Regulation 85"). Regulation 85 introduces the concept of Bonded Logistics Centres as one type of Bonded Storage Places in Indonesia.

Indonesia Introduces Regulation on Non-Conventional Oil and Gas Operations

The Indonesian Minister of Energy and Mineral Resources recently enacted Regulation No. 38 of 2015 regarding Expediting Non-Conventional Oil and Gas Operations, which came into effect on 2nd November 2015.

Government to Issue Regulation to Re-order or Revoke IUPs

For the past five years, the Ministry of Energy and Mineral Resources has sought to tidy up historic anomalies in the issuance of mining business permits (IUPs). Against this background, it has been recently floated in the media that the MEMR may soon issue a regulation to sort out problematic IUPs.

When Employees Leave: Non-competition and Protecting Confidential Information

With regard to non-competition following the period of employment, employers may wish to include non-competition and non-solicitation clauses in their employment contracts and Company Regulations. However, the enforceability of such post-employment constraints is less clear.

Indonesia to Restore Manufacturing Companies' Capability to Import Finished Goods

After the enactment of Minister of Trade Regulation No. 70/M-DAG/PER/9/2015 on Importer Identification Number, the Ministry of Trade recently issued a draft of a new regulation that may restore the previous exemption (API-P holders can import finished goods) which had been removed by Regulation 70.

Foreign Investment Restrictions

Restrictions on foreign shareholders in Indonesia are set out in the Negative Investment List contained in Presidential Regulation No. 39 of 2014 outlining the list of business fields that are closed and business fields that are open with requirements for investment.

Guide to Background Checks in Indonesia

Employers in Indonesia regularly carry out background checks on applicants. Background checks are not expressly regulated by Indonesian employment laws, and certain background checks are subject to the consent of the applicant in practice.

Minister of Finance Eliminates Double Taxation on Real Estate Investment Trusts

On 10th November 2015, the Minister of Finance issued Regulation No. 200/PMK.03/2015 on the Tax Treatment of Taxpayers and Taxable Entrepreneurs That Use a Certain Collective Investment Contracts Scheme for the Finance Sector. Under this regulation, the Minister of Finance provides several tax facilities to Real Estate Investment Funds.

Public Mergers and Acquisitions in Indonesia

Despite the slowing economy, M&A activity picked up generally towards the end of 2014, although not specifically involving public companies. This legal update provides an overview of laws on public mergers and acquisitions in Indonesia, covering the primary means of obtaining control of a public company.

Ship Finance in Indonesia – Updates and Trends

Bank Indonesia recently issued Bank Indonesia Regulation No. 17 of 2015, which requires cash and non-cash domestic transactions to use Indonesian rupiah, and Regulation 16/21 requires borrowers of offshore loans to comply with hedging, liquidity and credit rating requirements in certain instances.

New Manpower Law: Minimum Wage Formula and Use of Rupiah to Pay Employees

The newly released Government Regulation No. 78 of 2015 regarding Wages introduces several important changes, notably those concerning the calculation of provincial minimum wages and the requirement that all employees in Indonesia be paid in rupiah.

BKPM Issues New Regulation on Investment Facilities

As part of phase 2 of the Indonesian Government's economic stimulus package, improving the investment climate for both domestic and foreign investments, and to support the one roof investment services, the head of the BKPM has just issued Regulation No. 16 of 2015 on Guidelines and Procedures for Capital Investment Facilities.

Amendment to Regulation on the Utilization of Foreign Manpower

Indonesia’s Ministry of Manpower has issued Regulation No. 35 of 2015, which serves as an amendment to Regulation No. 16 of 2015 on the Procedure for the Utilization of Foreign Manpower, and brings about changes covered in this legal update.

New Regulation Prohibits Manufacturers from Importing Industrial/Finished Goods

As part of the government's economic deregulation package issued on 9th September 2015, the Ministry of Trade has issued another new regulation on imports. This new regulation removes the provision which allowed holders of Producer Importer Identification Numbers to import certain industrial/finished goods.

Stimulus Packages I to III: Impact on Customs and Trade

In September and October this year, the Indonesian government announced economic policy packages aimed at creating a conducive macroeconomic environment, hence boosting the country’s economic growth that slowed in the second quarter due to global economic conditions.

Legal Update on the Guidelines for the Utilisation of Foreign Manpower

Based on officials from the Ministry of Employment ("MOE") and actions recently taken by the MOE, it appears that the MOE has started to implement Minister of Employment Regulation No. 16/2015 on Guidelines for the Utilisation of Foreign Manpower.

Metal Minerals Benchmark Price Is Regulated in Indonesia

Four years after the issuance of the coal benchmark price, the Government of Indonesia has issued a formula for calculating the monthly benchmark price for base and precious metals.

Registration of Vessels in Indonesia

Any vessel of at least 7 gross tonnes can be registered under the Indonesian flag including offshore drilling rigs and mobile offshore drilling units. Companies seeking to obtain Indonesian nationality for their vessels must comply with Indonesian laws and regulations related to the ownership and operation of the vessel.

New Regulation in Indonesia Applies Final Income Tax to Mineral and Coal Sales

To increase state revenue from the mining sector, the Government of Indonesia has imposed a new final income tax on any sale of minerals and coal as regulated under Minister of Finance Regulation No. 107/PMK.010/2015.

Ministry of Trade Introduces New Restrictions on Import of Forestry Products

The Ministry of Trade amended Regulation No. 78/M-DAG/PER/10/2014 on Provisions on Import of Forestry Products through the issuance of Regulation No. 07/M-DAG/PER/1/2015 effective 1st September 2015. The latest regulation introduces new restrictions and administrative requirements for the import of forestry products.

New Tax Holiday Regulation

As part of the government's plan to boost investment in Indonesia, the Ministry of Finance issued Minister of Finance Regulation No. 159/PMK.010/2015 on Income Tax Reduction Facility offering a corporate income tax reduction of 10 – 100% applicable for five to 15 years.

Establishing a Presence in Indonesia from Abroad

The most common option for an overseas company as a foreign investor to establish a presence in Indonesia is by setting up a limited liability company (Perseroan Terbatas (PT)) with foreign ownership (PT PMA).

New Manpower Law: Foreign Domiciled Directors Must Have Indonesian Work Permit

The newly issued Indonesian Ministry of Manpower Regulation No. 16 of 2015 has replaced the contentious Minister of Manpower Regulation No. 12 of 2013, but in doing so created new requirements for foreign directors and commissioners of local companies to obtain a work permit.

Indonesian Regulatory Framework for Insurance Businesses

The main legislation for insurance and reinsurance businesses in Indonesia is the newly enacted Insurance Law, issued on 17th October 2014. This regulation introduced several significant changes to the sector with regards to subjects such as local shareholding requirements.

Indonesia Introduces New Visitor Visa Exemption

The Indonesian government recently issued Presidential Regulation No. 69 of 2015 regarding Visitor Visa Exemptions (PR 69/2015) to improve the relationship between Indonesia and other countries by waiving the visa requirement for visitors from certain countries to enter Indonesia.

Indonesia, ASEAN and Investment – A Q&A

With increased interest in Indonesia and the impending completion of the ASEAN Economic Community, foreign investors are looking for a means to do business in Indonesia. SSEK discusses the revised Negative Investment List, the impact of the ASEAN Free Trade Area on Indonesia and Bilateral Investment Treaties.

Mandatory Use of Rupiah in Indonesia

Indonesia’s central bank, Bank Indonesia, recently issued BI Regulation No. 17/3/PBI/2015 regarding the Mandatory Use of the Rupiah within the Republic of Indonesia, which restricts the use of foreign currency in domestic transactions conducted within Indonesian territory.

Regulation Curbs Power of Local Authorities in Indonesian Mining Sector

The Indonesian government appears to be getting serious about stripping regents of the authority to issue mining licenses. The government took the first steps in this direction with Minister of Energy and Mineral Resources Regulation No. 27 of 2013.

Indonesian Financial Services Authority in Review

This legal update looks at some of the regulatory changes that have been introduced since the Financial Services Authority (OJK) took over supervision of the capital markets, non-bank financial institutions and banking sectors prior to 2014.

Indonesian Financial Regulation: A Year in Review

The Financial Services Authority (Otoritas Jasa Keuangan or “OJK”), the financial services supervisory body in Indonesia, issued more than 30 regulations in 2014 covering capital markets, banks and non-bank financial institutions with the goal of developing the country's financial sector.

ASEAN Investors Afloat in a Sea of Uncertainty in Indonesia’s Shipping Industry

The 2014 Negative Investment List allows investors from ASEAN countries to hold up to 60% share ownership in Indonesian shipping companies engaged in sea transportation activities, but this provision is inconsistent with laws requiring JV shipping companies to be majority-owned by an Indonesian entity.

Investing in Indonesia’s Advertising and Marketing Sector

Foreign parties that wish to invest in Indonesia directly must follow the rules for FDI in the relevant business sector. For the advertising and marketing sector, international entities are subject to a host of regulations including limitations to foreign investment mandated by the Negative Investment List.

An Eye on PPP in Indonesia

With the intention to improve the development of PPP projects in Indonesia and to make PPP arrangements more appealing to investors, the Government recently issued Presidential Regulation No. 38 of 2015 regarding Cooperation between the Government and Enterprises in Infrastructure Procurement.

Indonesian Oil and Gas Sector: Legal Framework

Indonesia’s oil and gas sector is regulated mainly by Law No. 22 of 2001 regarding Oil and Natural Gas, which grants the government the exclusive rights to oil and gas exploitation and requires all private companies wishing to explore for and exploit oil and gas resources to enter into cooperation contracts.

Compliance Road Map for Companies in Indonesia

Compliance is an important issue for foreign investment companies doing business in Indonesia. As international organizations, foreign investment companies are not only required to comply with the laws and regulations of the country of origin of their parent companies but also with relevant laws and regulations in Indonesia.

Defamation under Indonesian Law

Defamation under Indonesian law involves the issuance of a defamatory statement that causes a person to suffer harm. Chapter XVI of the Indonesian Criminal Code governs both slander and libel in providing details on six different types of defamation, as is explained in this legal update.

A Closer Look at Indonesia’s Condominium Law

Indonesia enacted a new Condominium Law in 2011 which replaced Law No. 16 of 1985 but has not yet been formally implemented. This legal update provides insights into the current regulatory environment and the challenges faced by developers and prospective homeowners amid continued uncertainty.

Indonesian Language Law from the Perspective of the Courts

In 2013, the West Jakarta District Court issued a groundbreaking decision that captured the attention of the business community in stipulating that the Indonesian language must be used in commercial agreements with Indonesian businesses and agencies.

Government Changes Divestment Requirements for Mining Companies in Indonesia

Indonesia’s mining industry remains in flux. On 14th October 2014, the Indonesian Government issued the third amendment to Government Regulation No. 23 of 2010 regarding the Implementation of Mineral and Coal Mining Business Activities and in doing so introduced revised divestment requirements.

Food Export Regulations and Licenses in Indonesia

Food export activities in Indonesia can be carried out by individuals, institutions and business entities. This legal update provides a comprehensive overview of the different classifications for export goods, as well as relevant licensing procedures and regulations.

Indonesian Franchising Rules and Regulations

With a population of 250 million, Indonesia is an attractive country for investors interested in the distribution, retail and franchise sectors. Given this context, this legal update provides an overview of the latest changes to franchising regulations issued by the Ministry of Trade.

New Registration Rules for Integrated Construction Service Companies in Indonesia

Indonesia’s Construction Services Development Institute (LPJK) in June 2014 issued LPJK Regulation No. 5/2014 regarding Integrated Construction Services Registration, which amends the requirements for the issuance of Business Entity Certificates (SBU) for integrated construction service companies.

Legal Guide to Oil Regulation in Indonesia: Regulation Overview

This update provides a comprehensive overview of the legal framework regulating oil activities in Indonesia, including Law No. 22 of 2001 regarding Oil and Natural Gas as well as revisions to Government Regulation No. 35 of 2004 on the topic of upstream business activities.

Discrimination Law and Equality in Indonesia

Indonesia does not have an overarching anti-discrimination law; rather, a patchwork of laws and sector-specific regulations prohibit discrimination and encourage equality. Given the context of Indonesia’s gains in its equality rankings, this update provides an overview of the relevant laws.

New Negative Investment List Introduces Changes to Health Investment in Indonesia

The Indonesian Government has released the long-awaited New Negative Investment List, issued under Presidential Regulation No. 39 of 2014. Among the major changes from previous regulations is an increase in maximum foreign ownership levels in several key industries, including the health sector.

Foreign Investment in Indonesian Real Estate

Indonesia’s Agrarian Law provides that foreigners can only acquire a right to use (hak pakai) title for land if they reside in Indonesia. This update takes stock of the current legal framework governing foreign investment in Indonesian real estate and provides an overview of the expected challenges.

The New Geothermal Energy Law: New Hope for Geothermal Energy Development

Dwindling production of traditional energy sources such as oil and gas has the government seeking alternatives to maximize national energy production. To this end, Indonesia in 2014 introduced provisions to better manage geothermal energy through Law No. 21 of 2014.

Bank Indonesia Regulations on Foreign Exchange Transactions

Bank Indonesia (BI) recently issued several regulations related to foreign exchange transactions by Indonesian banks. These regulations update existing regulations issued by BI with the goal of creating a healthy foreign exchange market in Indonesia, as is explained in this brief summary.

Business Updates

Why Indonesia

Business Guide

Legal Updates

Partners Updates

Business Advisory

Useful Resources

Business Directory