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".
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.
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.
The new Financial Services Authority Regulation on the Single Presence Policy in Indonesian Banking was issued in July 2017. The policy aims to ensure that a single entity does not simultaneously hold a controlling interest in more than one bank. Therefore, a controlling shareholder of more than one bank is required to merge or consolidate its controlled banks, establish a bank holding company or establish a holding function.
The Financial Services Authority (OJK) has introduced rules for the employment of expatriates and the transfer of knowledge in the banking sector, pursuant to which it has taken over the supervisory role previously performed by Bank Indonesia. Therefore, in order to employ an expatriate, a bank must now obtain OJK approval and submit reports on its expatriate staff. An expatriate's work permit will be processed by the Ministry of Manpower only after having been approved by the OJK.
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.
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.
The Ministry of Manpower recently issued Regulation 18/2017, which introduces an online-only procedure for mandatory manpower reporting. The regulation specifies when companies must submit an online report and requires them to do so via the ministry website. It also regulates the usage and management of data from manpower reports.
The minister of home affairs recently enacted Regulation 22/2016, amending Regulation 27/2009 on the Guidelines for the Granting of Regional Nuisance Permits. The amendment is part of the president's policy to reduce the number of business permits and licences required to start a business. It introduces important changes to the criteria considered in nuisance permit applications and the types of business that are exempted from the requirement to obtain a permit.
Indonesia's Investment Coordinating Board (BKPM) recently issued a new regulation that amends BKPM Regulation 6/2018, which sets out guidelines and procedures for licensing and facilities under Indonesia's foreign direct investment (FDI) regime. The most significant changes include the reaffirmation that certain FDI companies must comply with divestment obligations and the confirmation that shareholding foreign directors and commissioners are exempt from the normal expatriate employment rules.
The Indonesian Investment Coordinating Board (BKPM) recently issued the Regulation concerning Guidelines and Procedures for Investment Licensing and Facilities. The regulation enables companies investing in a specific business field to apply for a business licence directly without obtaining an investment registration in certain circumstances. Further, it is relatively more lenient than the previous regulation with regard to the divestment obligation imposed on foreign companies.
The Financial Services Authority recently showed its support for the government's tax amnesty programme by issuing a circular letter regarding mandatory tender offers as a result of public company acquisitions. The circular letter exempts any investor that has become the controller of a public company through an acquisition from the obligation to conduct a tender offer and is meant as an incentive for investors that control public companies through nominees to participate in the programme.
The government has finally published the long-awaited new Investment Negative List. The new list sets out the lines of business that are closed to investment, as well as those that are open to investment on certain conditions. The new list replaces the previous list, which was issued in 2007.
The Capital Market and Financial Institutions Supervisory Board has issued a regulation regarding the buyback of shares issued by issuers or public companies. This regulation repealed and replaced previous decisions on the same subject matter. Among the board's considerations for issuing the regulation was the need to implement policies that are in line with provisions on share buybacks of the new Company Law.
The start of 2019 saw a renewed attempt by the government to compel exporters of natural resources-based commodities to repatriate their export earnings and deposit them in the Indonesian financial system with the issuance of new rules in this regard. The minister of finance has now established penalties for non-compliance with these rules.
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.
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.
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.
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.