Latest updates

New Regulation on the Settlement of Disharmony between Laws and Regulations through Mediation
Makarim & Taira S
  • Arbitration & ADR
  • Indonesia
  • 04 July 2019

The Ministry of Laws and Human Rights Regulation on the Settlement of Disharmony between Laws and Regulations through Mediation recently took effect. The regulation reinstates the possibility to settle disputes concerning laws and regulations outside the courts through the introduction of mediation, including disputes over ministerial regulations, non-ministerial government institution regulations, non-structural institution regulations and regional laws and regulations.

BANI legal status up in the air
Makarim & Taira S
  • Arbitration & ADR
  • Indonesia
  • 11 April 2019

The Indonesia National Board of Arbitration (BANI) was established in 1977. In 2016 the Ministry of Law and Human Rights created BANI Pembaharuan (ie, the Renewed BANI), which claims that it is a revised version of the original BANI. However, the original BANI does not recognise the Renewed BANI and claims that it has been using the BANI name unlawfully. This duality could create uncertainty when commercial parties wish to appoint BANI as their dispute settlement forum.

New Bank Indonesia regulation on prudential rules for offshore debt and FX-denominated liabilities
Ali Budiardjo, Nugroho, Reksodiputro
  • Banking
  • Indonesia
  • 22 March 2019

Bank Indonesia recently issued an umbrella regulation on the application of prudential norms. As with the now revoked Regulation on Offshore Loans in the Banking Sector (as amended), Regulation 21 stresses the importance of compliance with prudential norms for maintaining macroeconomic and financial system stability. However, while the previous regulation's scope was confined to offshore bank loans, Regulation 21 encompasses "offshore bank debt and FX-denominated other bank liabilities".

Five issues commonly encountered in commercial building leases
Makarim & Taira S
  • Real Estate
  • Indonesia
  • 01 March 2019

Leasing is an easy way for businesses to acquire office space in a prime location and helps them to free up working capital. Thus, a carefully prepared lease agreement is invaluable for the lessee and lessor. As a number of issues may be encountered when leasing a building for office space, it is important to consider these ahead of time.

New framework to establish Securities Finance Agency introduced
Ali Budiardjo, Nugroho, Reksodiputro
  • Capital Markets
  • Indonesia
  • 12 February 2019

The Financial Services Authority recently issued a new regulation which provides a framework to establish the Securities Finance Agency (SFA). The agency aims to boost transaction volumes and liquidity in the Indonesian stock market, particularly by encouraging margin trading and short selling. Upon its establishment, the SFA will provide securities financing to brokerage firms.

Repatriation of natural resource export earnings: new regulation signals stricter approach
Ali Budiardjo, Nugroho, Reksodiputro
  • Energy & Natural Resources
  • Indonesia
  • 11 February 2019

Government Regulation 1/2019 requires exporters in the natural resources sector to repatriate their forex-denominated export earnings to Indonesia. Thus, forex-denominated export proceeds in the mining, plantation, forestry and fisheries sectors must be deposited in the Indonesian financial system. Overall, the regulation is clearly intended to bolster Indonesia's balance of payments situation, which has worsened considerably over the past year.

Will BKPM takeover of OSS help to eliminate glitches?
Ali Budiardjo, Nugroho, Reksodiputro
  • Company & Commercial
  • Indonesia
  • 28 January 2019

The online single submission (OSS) system constitutes a significant overhaul of Indonesia's business and investment licensing regime. Although much later than scheduled, responsibility for the OSS has now officially transferred to the Investment Coordinating Board. The government made it clear from the outset that the OSS would take time to perfect. Although the OSS works reasonably well for the most part, a number of problems remain.

Anti-corruption update: some encouragement for whistleblowers and first-ever prosecution of corporation
Ali Budiardjo, Nugroho, Reksodiputro
  • White Collar Crime
  • Indonesia
  • 24 December 2018

A number of anti-corruption developments took place in Indonesia in 2018. For example, the Government Regulation on Public Participation in the Prevention and Suppression of Corruption was issued in order to incentivise more whistleblowers to come forward and encourage public participation in the fight against corruption. Further, the Corruption Eradication Commission brought its first-ever prosecution against a corporation.

New regime for hiring foreign employees
Makarim & Taira S
  • Immigration
  • Indonesia
  • 21 December 2018

Indonesian entities must comply with certain requirements and follow a specific procedure when hiring foreign employees. The requirements and procedure used to be provided for in Minister of Manpower (MOM) Regulation 16/2015, as amended by MOM Regulation 35/2015. However, in 2018 the MOM issued a new regulation, which introduced a requirement to obtain a notification from the MOM when hiring foreign employees.

Partnership agreements in view of Manpower Law
Makarim & Taira S
  • Employment & Benefits
  • Indonesia
  • 10 October 2018

One of the most common ways in which a company can use a person's services is by entering into a partnership agreement and thereby treating them as a partner instead of an employee. However, partnership agreements often give rise to disputes, especially if they are terminated. There have been many cases in which the Manpower Office or the Industrial Relations Court have deemed poorly drafted partnership agreements to be employment agreements.

OJK issues umbrella regulation for fintech development and establishes regulatory sandbox regime
Ali Budiardjo, Nugroho, Reksodiputro
  • Banking
  • Indonesia
  • 05 October 2018

Until recently, the Financial Services Authority (OJK) had never issued an overarching regulation governing the development of the fintech sector as a whole or replicating the sandbox regime and pre-audit mechanism established by Bank Indonesia for fintech in the payments arena. This gap has now been filled by OJK Regulation 13/POJK.02/2018 on Digital Financial Innovation in the Financial Services Sector.

New online single submission system: what is it?
Ali Budiardjo, Nugroho, Reksodiputro
  • Company & Commercial
  • Indonesia
  • 17 September 2018

Government Regulation 24/2018 recently entered into force and established the integrated online single submission (OSS) system, which constitutes a significant overhaul of Indonesia's business licensing regime. The system aims to enable businesses to obtain all necessary central and local government business and operating licences online using the OSS portal. Although these changes have been welcomed, the OSS system remains a work in progress.

Uncertainty surrounding legal status of foreign employees
Makarim & Taira S
  • Immigration
  • Indonesia
  • 17 August 2018

The employment of foreign citizens in Indonesia is subject to various restrictions, including with regard to employment terms. Foreign employees can be employed only on a temporary basis and thus cannot be considered permanent employees. However, they also cannot be considered fixed-term employees under Articles 56 and 59 of the Manpower Law. Despite this framework, mediators and the Industrial Relations Court have expressed inconsistent views on the legal status of foreign employees.

New regulation has significantly changed e-money landscape
Ali Budiardjo, Nugroho, Reksodiputro
  • Banking
  • Indonesia
  • 27 July 2018

After nine years of regulating e-money transactions, the Indonesian Central Bank has responded to changes in technology by replacing the previous e-money regulation. The issuance of the new regulation has significantly changed the e-money landscape, as it applies to all licensed e-money players and prioritises consumer protection by requiring minimum capital and the placement of floating funds.

All in the family: court removes restriction on employment of spouses and blood relatives
Makarim & Taira S
  • Employment & Benefits
  • Indonesia
  • 13 June 2018

Previously, under the Manpower Law, employers in Indonesia could include an article in their employment agreements, company regulations or collective labour agreements which allowed them to terminate employees for having a marital or blood relationship with another employee in the same company. However, the Constitutional Court recently sided with eight individual claimants who contended that the wording of the law contravened their constitutional rights.

Uncertainty of foreign employment status
Makarim & Taira S
  • Employment & Benefits
  • Indonesia
  • 25 April 2018

The number of expatriate employees taking legal action against their employers for terminating their employment contracts, whether for economic reasons or for misconduct, has grown in recent years. Although most jurists maintain that expatriates cannot be permanent employees or receive the same severance entitlements as Indonesian permanent employees, this has not always been the case.

MEMR moves quickly to limit application of coal price caps to new contracts
Ali Budiardjo, Nugroho, Reksodiputro
  • Energy & Natural Resources
  • Indonesia
  • 02 April 2018

Following the recent issuance of the ​Ministry of Energy and Mineral Resources decree which imposed price caps on coal supplied for power generation in the public interest, the coal industry was expected to undertake significant lobbying in order to reduce or limit the decree's impact. This anticipated lobbying appears to have commenced already, as the decree was amended on March 12 2018 after having been on the statute books for just four days.

Government caps prices of coal for power generation
Ali Budiardjo, Nugroho, Reksodiputro
  • Energy & Natural Resources
  • Indonesia
  • 26 March 2018

The government recently imposed caps on the prices payable for coal to be used for power generation in the public interest. The maximum price payable under the new Ministry of Energy and Mineral Resources decree is 30% less than the Indonesian benchmark price for equivalent coal sold for export in February 2018, which means that the country's coal producers will suffer a substantial cut to their profitability by selling coal for domestic power generation.

MEMR delivers on promise to revoke regulations
Ali Budiardjo, Nugroho, Reksodiputro
  • Energy & Natural Resources
  • Indonesia
  • 19 March 2018

The Ministry of Energy and Mineral Resources recently announced the revocation of 32 regulations in furtherance of the government's efforts to reduce the regulatory burden on the energy and mineral resources sector. However, it was unclear which of these regulations had been revoked before the announcement and which would be revoked in the future. This situation has now been clarified with the issuance of four new revoking regulations, which form part of what some have called a 'big-bang' reform.

MEMR announces easing of regulatory burden for new and renewable energy sector
Ali Budiardjo, Nugroho, Reksodiputro
  • Energy & Natural Resources
  • Indonesia
  • 05 March 2018

The Ministry of Energy and Mineral Resources recently announced the revocation of 32 regulations in the energy and mineral resources sector, three of which are of particular importance to independent power producers in the new and renewable power sub-sector. However, a subsequent examination revealed that most if not all of the regulations have yet to be revoked, and the lack of clarity in this regard has called the ministry's commitment to transparency into question.